TY  - UNPD
A1  - Agarwal, Sumit
A1  - Liu, Chunlin
A1  - Souleles, Nicholas
T1  - The reaction of consumer spending and debt to tax rebates – evidence from consumer credit data
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2008,01
N2  - We use a new panel dataset of credit card accounts to analyze how consumer responded to the 2001 Federal income tax rebates. We estimate the monthly response of credit card payments, spending, and debt, exploiting the unique, randomized timing of the rebate disbursement. We find that, on average, consumers initially saved some of the rebate, by increasing their credit card payments and thereby paying down debt. But soon afterwards their spending increased, counter to the canonical Permanent-Income model. Spending rose most for consumers who were initially most likely to be liquidity constrained, whereas debt declined most (so saving rose most) for unconstrained consumers. More generally, the results suggest that there can be important dynamics in consumers’ response to “lumpy” increases in income like tax rebates, working in part through balance sheet (liquidity) mechanisms.
T3  - CFS working paper series - 2008, 01 
KW  - Consumption
KW  - Saving
KW  - Life-Cycle Model
KW  - Permanent-Income Hypothesis
KW  - Liquidity Constraints
KW  - Fiscal Policy
KW  - Tax Cuts
KW  - Tax Rebates
KW  - Windfalls
KW  - Konsumentenkredit
Y1  - 2008
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/304
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-52350
IS  - November 2007
ER  -