Yes, Fiscal Stimulus Can Pull Spending Forward from the Future into the Present When It Is Most Needed

Atif Mian and Amir Sufi:

The Effects of Fiscal Stimulus: Evidence from the 2009 ‘Cash for Clunkers’ Program: A key rationale for fiscal stimulus is to boost consumption when aggregate demand is perceived to be inefficiently low. We examine the ability of the government to increase consumption by evaluating the impact of the 2009 “Cash for Clunkers” program on short and medium run auto purchases. Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the...