Consumers’ Responses to Stimulus Payments with a Pre-Contribution Design by Marc Chan

Join us for this weeks Macroeconomics Research Seminar, Autumn Term 2023.

Marc Chan, from the Department of Economics at the University of Melbourne, will present this weeks Macroeconomics seminar on Consumers’ Responses to Stimulus Payments with a Pre-Contribution Design.

Abstract

Consumers spend a substantial fraction of stimulus payments. This is a well-documented phenomenon that deviates from prediction by standard consumption theory. We explore this by exploiting a large-scale stimulus voucher program in Taiwan with a design that required recipients to contribute a lump sum cash upfront. As illustrated by our conceptual model, this shifted a recipient’s non-voucher wealth to voucher wealth. Our empirical analysis shows that this design increased consumer spending per dollar of government subsidy. These results provide direct evidence of mental accounting in consumer behaviour and explain why consumers react to stimulus programs.

This seminar will be held on campus in the Economics Common Room at 1.30pm on Tuesday 31 October 2023. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.