Cash for Corollas: When Stimulus Reduces Spending Academic Article uri icon

abstract

  • The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the programs fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

published proceedings

  • American Economic Journal: Applied Economics

altmetric score

  • 70.724

author list (cited authors)

  • Hoekstra, M., Puller, S. L., & West, J.

citation count

  • 33

complete list of authors

  • Hoekstra, Mark||Puller, Steven L||West, Jeremy

publication date

  • July 2017