Preliminary

Abstract: Using special questions added to the Consumer Expenditure Survey, we measure the response of household spending to the economic stimulus payments (ESPs) disbursed during the spring and summer of 2008. We also extend the related literature in a number of ways. First, we are able to measure the spending response using only random variation in the timing of ESP receipt. Second, we test whether the method of delivery (paper check versus electronic transfer) matters for spending. Third, we evaluate a complementary approach to identifying the impact of tax cuts, which asks consumers to self-report whether they spent their tax cuts. We find that, on average, households spent about 12-30 % of their stimulus payments on nondurable consumption goods during the three-month period in which the payments were received. Further, there was also a significant effect on durables purchases, in particular auto purchases. Based on point estimates, the estimated responses are largest for lower-income households and homeowners. The responses are also largest for self-reported spenders, though self-reported savers also spent a significant fraction of the payments. The responses do not significantly differ across pape