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

Winfried Koeniger and 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.

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Year of publication:	[2024]
Authors:	Koeniger, Winfried ; Kress, Peter
Publisher:	Frankfurt am Main, Germany : Center for Financial Studies, Goethe University
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

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Extent:	1 Online-Ressource (circa 64 Seiten) Illustrationen
Series:	CFS working paper series. - Frankfurt, M. : [Verlag nicht ermittelbar], ZDB-ID 2196856-1. - Vol. no. 724
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/306861 [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/10015127049