Wednesday, September 23, 2009

Taylor and a stimulus follow-up

Last week, John Taylor and friends authored a piece in the Wall St. Journal that updated their earlier discussion, which I blogged about here.

A 2009 paper by Matthew Shapiro and Joel Slemrod describes how the 2008 tax cuts seemed to offer low "bang for the buck." I particularly like their Table 2, which lists the percentage responses to their survey question about spending the tax rebate. The marginal propensity to consume rises with age, which is consistent with what the life cycle model predicts.