Australians more easily stimulated than Americans

I have a new paper out today, looking at the impact of the Australian 2009 household payments on expenditure. It uses a poll question contained in the June ‘ANU Poll’. Here’s the abstract (click on the title for the full paper):

How Much Did the 2009 Fiscal Stimulus Boost Spending? Evidence from a Household Survey
Andrew Leigh
Using survey evidence, I estimate the impact of a $12 billion package of household payments delivered in Australia between March and May 2009. Forty percent of households who said that they received the payment reported having spent it. This is approximately twice the spending rate that has been recorded in surveys assessing the 2001 and 2008 tax rebates in the United States. Using an approach for converting spending rates into an aggregate marginal propensity to consume (MPC), this is consistent with an aggregate MPC of 0.41−0.42. Since this estimate is based only on first-quarter spending, it may be an underestimate of the longer-run impact of the package on consumer expenditure.

Surveys aren’t the ideal way of estimating expenditure, but in my view they’re superior to looking for sudden movements in quarterly macro figures, which has been much of the debate so far.

2 thoughts on “Australians more easily stimulated than Americans”

  1. Don’t forget that the stimulus payments came at the same time as interest rate cuts. Australians are more likely to have floating-rate mortgages than Americans, so that would have boosted our spending power as well.

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  2.  
    I suspect the rate of spending it may be even higher than that.  Some people aren’t especially deliberate about finanacial decisions and will spend if their account has money, other people don’t want to admit that they spent it even when they probably should have saved it.
    My wife used it as justification for any number of spending decisions (only 4 at last count).
     

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