Accelerator or Brake? Cash for Clunkers, Household Liquidity, and Aggregate Demand∗
نویسندگان
چکیده
We estimate the importance of household liquidity for the effect of the Car Allowance Rebate System (CARS) on vehicle transactions. We measure the average program impact by comparing households with “clunkers” eligible for CARS to households with similar vehicles that are ineligible. The liquidity provided by CARS contributed to its larger than anticipated take-up. Clunkers with existing loans, which required immediate repayment upon trade-in, were tradedin at much lower rates, an effect consistent with liquidity constraints and distinguishable from that of other debt, household income, and the size of the program subsidy. Household debt capacity did not measurably constrain participation. JEL classification: G18(General Financial Markets; Government Policy and Regulation) D14(Household Saving; Personal Finance), E62(Fiscal Policy), H24(Personal Income and Other Nonbusiness Taxes and Subsidies), H31(Fiscal Policies and Behavior of Economic Agents, Household),
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