Spending Responses to High-Frequency Shifts in Payment Timing: Evidence from the Earned Income Tax Credit-Reference-Cited by-同舟云学术

Spending Responses to High-Frequency Shifts in Payment Timing: Evidence from the Earned Income Tax Credit

Published:2023-08-01 Issue:3 Volume:15 Page:89-114
ISSN:1945-7731
Container-title:American Economic Journal: Economic Policy
language:en
Short-container-title:American Economic Journal: Economic Policy

Author:

Aladangady Aditya¹,Aron-Dine Shifrah²,Cashin David¹,Dunn Wendy¹,Feiveson Laura¹,Lengermann Paul¹,Richard Katherine³,Sahm Claudia⁴

Affiliation:

1. Federal Reserve Board of Governors (email: )

2. Stanford University (email: )

3. University of Michigan (email: )

4. Sahm Consulting (email: )

Abstract

This study explores the spending response to tax refunds for Earned Income Tax Credit recipients using a novel dataset combining transaction-based measures of retail spending with administrative IRS data on tax refunds. Our dataset allows us to exploit variation in the timing of EITC refunds, including changes related to the 2017 PATH Act, along with cross-state differences in refund magnitudes to identify spending responses. Results show EITC recipients spend about $0.30 per refund dollar ($1,150 for the average refund) within just two weeks of issuance, suggesting stimulus targeted at this population may provide a quick boost to aggregate demand. (JEL D12, E32, G51, H24, I38, K34)

Publisher

American Economic Association

Subject

General Economics, Econometrics and Finance

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/pol.20200590

Reference62 articles.

1. Aladangady, Aditya, Shifrah Aron-Dine, David Cashin, Wendy Dunn, Laura Feiveson, Paul Lengermann, Katherine Richard, and Claudia Sahm. 2018. "High-frequency Spending Responses to the Earned Income Tax Credit." FEDS Notes, June 21. https://www.federalreserve.gov/econres/notes/ feds-notes/high-frequency-spending-responses-to-the-earned-income-tax-credit-20180621.htm.

2. Aladangady, Aditya, Shifrah Aron-Dine, David Cashin, Wendy Dunn, Laura Feiveson, Paul Lengermann, Katherine Richard, and Claudia Sahm. 2023. "Replication data for: Spending Responses to High-Frequency Shifts in Payment Timing: Evidence from the Earned Income Tax Credit." American Economic Association [publisher], Inter-university Consortium for Political and Social Research [distributor]. https://doi.org/10.3886/E157541V1.

3. Aladangady, Aditya, Shifrah Aron-Dine, Wendy Dunn, Laura Feiveson, Paul Lengermann, and Claudia Sahm. 2016. "The Effect of Hurricane Matthew on Consumer Spending." FEDS Notes, December 2. https://doi.org/10.17016/2380-7172.1888.

4. Aladangady, Aditya, Shifrah Aron-Dine, Wendy Dunn, Laura Feiveson, Paul Lengermann, and Claudia Sahm. 2017. "The Effect of Sales-Tax Holidays on Consumer Spending." FEDS Notes, March 24. https://doi.org/10.17016/2380-7172.1941.

5. Aladangady, Aditya, Shifrah Aron-Dine, Wendy Dunn, Laura Feiveson, Paul Lengermann, and Claudia Sahm. 2022. "From Transaction Data to Economic Statistics: Constructing Real-Time, High-Frequency, Geographic Measures of Consumer Spending." In Big Data for Twenty-First-Century Economic Statistics, edited by Katharine G. Abraham, Ron S. Jarmin, Brian Moyer, and Matthew D. Shapiro, 115-145. Chicago, IL: University of Chicago Press.