American Economic Journal: Macroeconomics
no. 4, October 2023
We study a new consumption stimulus program implemented by a large Chinese city that leverages mobile payment platforms to dispense massive amounts of small-value digital coupons. Exploiting a "rush" design of the dispensing process in which over 1 million program participants compete for coupons on a first-come, first-served basis through a digital portal, we estimate that winning coupons increases weekly out-of-pocket spending by US$3 for every US$1 in government subsidy. Coupon-winning consumers practice intertemporal substitution by moving up purchases that would have been made four months in the future. Customer flow analysis suggests that coupons distort consumption toward pricier options.
Xing, Jianwei, Eric Yongchen Zou, Zhentao Yin, Yong Wang, and Zhenhua Li.
""Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending."
American Economic Journal: Macroeconomics,
Intertemporal Household Choice; Life Cycle Models and Saving
Macroeconomics: Consumption; Saving; Wealth
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
State and Local Taxation, Subsidies, and Revenue
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty