Wednesday, September 16, 2020 | 2:00pm-3:30pm | ZOOM

Abstract

We utilize detailed transaction records of more than one million de-identified individuals to study the effect of a large-scale Chinese government-issued digital coupon program on consumer spending. At the core of this stimulus program are a set of salient features that drive the marginal propensity to consume to a level ranging from 3.4 to 5.8, an order of magnitude larger than those in previous studies. We find that a behavioral model with mental accounting and loss framing can match the empirical evidence from the field. Our analysis informs the current debate about cost effective policy tools to recover the economy.