Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How It Is Delivered?

Claudia R. Sahm, Matthew D. Shapiro, Joel Slemrod

NBER Working Paper No. 16246
Issued in July 2010, Revised in December 2011
NBER Program(s):Economic Fluctuations and Growth, Monetary Economics, Public Economics

Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay tax credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters/University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008.

A non-technical summary of this paper is available in the January 2011 NBER Digest.  You can sign up to receive the NBER Digest by email.

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Document Object Identifier (DOI): 10.3386/w16246

Published: Claudia R. Sahm & Matthew D. Shapiro & Joel Slemrod, 2012. "Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How It Is Delivered?," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 216-50, August. citation courtesy of