Stimulating Consumption at Low Budget: Evidence from a Large-Scale Policy Experiment Amid the COVID-19 Pandemic

We use a unknown panel with detailed trade records of further than one millionde-identified substances to study the effect of a large-scale Chinese government– issued digital ticket program on consumer spending. Exploiting a difference-in- differences approach, we find that the digital ticket is considerably effective in stimulating consumption. An effective government subvention of RMB 1 can drive surplus spending of RMB3.4 to RMB5.8, and the effect persists across multiple ticket distribution swells. In explaining the results, we find that a behavioral model with psychological reason and loss aversion can match the empirical voucher from the field. Our analysis, by illustrating the weight of rooting behavioral factors into the design and prosecution of public policy, informs the current debate about costeffective policy tools to recover the skimping.

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