Can Tax Rebates Stimulate Consumption Spending in a Life-Cycle Model?

• 成果类型: Article
• 署名作者: Huntley, Jonathan; Michelangeli, Valentina
• 署名单位: Congressional Budget Office; European Central Bank; Bank of Italy
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.6.1.162
• 发表日期: 2014
• 页码: 162-189
• 关键词: asset location; household consumption; transactions demand; consumer response; income; allocation

摘要

We build a life-cycle model with earnings risk, liquidity constraints, and portfolio choice over tax-deferred and taxable assets to evaluate how household consumption changes in response to shocks to transitory anticipated income, such as the 2001 income tax rebate. Households optimally invest in tax-deferred assets, which are encumbered by withdrawal penalties, and exchange taxable precautionary savings for higher after-tax returns. The model predicts a higher marginal propensity to consume out of a rebate than is predicted by a standard frictionless life-cycle model. Liquidity-constrained households-with few financial assets or portfolios expensive to reallocate-consume a higher fraction of the rebates.