Digital fiscal stimulus and SMEs : insights from Thailand's Half and Half Program

This study leverages the unique opportunities presented by the digitization of economic activity to investigate the impact of Thailand's 'Half and Half' program-a targeted, digital co-pay fiscal stimulus-on SMEs and consumer spending. Utilizing weekly province-level data from LINE MAN Wongnai, a leading digital delivery platform in Thailand, the study offers insights that were previously challenging to glean from traditional cash stimulus methods. My analysis employs a difference-in-difference framework, using program participation as the basis for the identification strategy. The study primarily focuses on the period from August to December 2021, which includes the program's integration with delivery platforms in October 2021. I find that the 'Half and Half' program significantly elevates sales among participating vendors relative to nonparticipants. Regarding the underlying mechanism, the findings indicate that the increase in sales is primarily driven by an expansion in the unique customer base, rather than an increase in individual order sizes. Crucially, these positive effects persist even after the program's conclusion, with smaller vendors experiencing more pronounced sustained benefits. On the consumer side, I find that the program leads to a considerable increase in total subsidy-inclusive spending, albeit with some substitution from non-program spending. The estimated marginal propensity to consumer (MPC) stands at 0.4, with a higher value in lower-income provinces. This investigation enriches the emerging literature on digital fiscal stimulus, underlining their potential for both immediate and sustained economic impact. The findings bear crucial implications for policymakers navigating fiscal strategies in an increasingly digital economic landscape.