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On The Size Of Stimulus Checks: How Much Is Too Much?.pdf

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Preview of On the Size of Stimulus Checks: How Much is Too Much?

🔗 Source: conference.nber.org

📊 Size: 1.28 MB

📄 Pages: 48 pages

⬇️ Downloads: 64

Summary

Stimulus checks have become a key policy tool in US recessions, but the optimal size is unclear. The marginal propensity to spend (MPC) varies with check size, affecting the "bang-for-the-buck" of each additional dollar. A model of durable spending with a smooth adjustment hazard finds that the MPC remains elevated even for large stimulus checks. In a typical recession, a $600 check closes roughly half the output gap, which is half as large as a canonical non-durable spending model and three times larger than a durable spending model. Checks of $1,500 to $2,000 fully close the output gap, providing an upper bound for policymakers.

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Description

Stimulus checks have become a key policy tool in US recessions, but the optimal size is unclear.

Technical Information

File Format: PDF
File Size: 1.28 MB
Pages: 48
Language: EN
Total Downloads: 64
Last Updated: 1 month ago

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