Accelerator or Brake? Cash for Clunkers, Household Liquidity, and Aggregate Demand
Name
pol.20170122.pdf
Description
Published version
Size
765.12 KB
Format
Adobe PDF
Checksum (MD5)
0f94db1021638826d503e878ec53d43b
Author(s)
Green, Daniel
Melzer, Brian T
Parker, Jonathan A
Rojas, Arcenis
Date Issued
2020
Journal
AEJ: Economic Policy
Publisher
American Economic Association
Version
Final published version
Abstract
This paper evaluates the Car Allowance Rebate System (CARS ) by comparing the vehicle purchases and disposals of households with eligible “clunkers” to those of households with similar but ineligible vehicles. CARS caused roughly 500,000 purchases during the program period. The provision of liquidity, through a rebate usable as a down payment, was critical in generating this large response. Participation was rare among households that owned clunkers with outstanding loans, which required loan repayment. This decline in participation is attributed to households’ preference for lower down payments and distinguished from the effects of income, other indebtedness, and the program subsidy. (JEL E23, E62, G51, H24, H31)
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution 4.0 International license
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1257/POL.20170122
