The effect of unconventional fiscal policy on consumption : new evidence based on transactional data

Winfried Koeniger, Peter Kress

We use novel transaction-level card expenditure data to estimate the effect of the temporary value-added tax (VAT) cut in Germany 2020. We find that the annualized growth rate of expenditures for durables increased by 6 percentage points (pp) during the tax cut, with a particularly strong increase of up to 11 pp for consumer electronics. The expenditure growth rate for semi-durables and non-durables did not change by and large. The estimates imply a consumption multiplier of 0.2 and an elasticity of fiscal revenues to a VAT rate reduction of two thirds.

MoreLess

Year of publication:	October 2024
Authors:	Koeniger, Winfried ; Kress, Peter
Publisher:	Bonn, Germany : IZA - Institute of Labor Economics
Subject:	consumption expenditure \| transactional data \| temporary VAT cut \| unconventional fiscal policy \| Umsatzsteuer \| Sales tax \| Privater Konsum \| Private consumption \| Ankündigungseffekt \| Announcement effect \| Dauerhafte Konsumgüter \| Durable goods \| Schätzung \| Estimation \| Verbrauchsteuer \| Excise tax \| Inflationserwartung \| Inflation expectations \| Deutschland \| Germany \| Finanzpolitik \| Fiscal policy \| Großbritannien \| United Kingdom

Extent:	1 Online-Ressource (circa 63 Seiten) Illustrationen
Series:	Discussion paper series / IZA. - Bonn : IZA, ISSN 2365-9793, ZDB-ID 2120053-1. - Vol. no. 17412
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/307236 [Handle]
Classification:	D12 - Consumer Economics: Empirical Analysis ; E21 - Consumption; Saving ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; E65 - Studies of Particular Policy Episodes ; H31 - Household
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10015084082