On this matter, nudge and technocracy failed to predict

Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay tax credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters/University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008.

You may recall that the structure of these tax cuts was designed scientifically to produce maximum bang for the buck.  That is from a new paper by Claudia Sahm, Matthew Shapiro, and Joel Slemrod (pdf).

Of course, if you are more worried about the length of the deleveraging recession, some mistakes may cancel out and perhaps the ARRA approach, leading to higher savings and quicker balance sheet repair, was wiser after all.


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