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ID193024
Title ProperConsumption Response to Government Income Subsidies
Other Title InformationKorea’s Case
LanguageENG
AuthorKang, Jong Woo ;  Tayag, Mara ;  Sy, Dominique
Summary / Abstract (Note)The Republic of Korea Government implemented a universal consumption subsidy program to combat the coronavirus disease 2019 (COVID-19) economic downturn in 2020. Using granular, micro-level transaction data, we find that the subsidy scheme has stimulated household consumption immediately after receipt. Moreover, lower income groups demonstrate higher marginal propensity to consume than middle and higher income groups; this holds true even when creating synthetic control groups that model rational spending behavior. This can have a significant implication on the effectiveness of fiscal impulse. Using income and average historical credit card spending, we also demonstrate credit and liquidity constraints are major factors affecting consumption responses.
`In' analytical NoteJournal of Asian and African Studies Vol. 58, No.6; Sep 2023: p.941-974
Journal SourceJournal of Asian and African Studies 2023-08 58, 6
Key WordsFiscal Stimulus ;  Cash Transfers ;  Marginal Propensity to Consume ;  COVID-19 ;  Credit Card Transaction Data