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| Damien Échevin |
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| ''Ricardian or Spender Consumers?
Evidence from a Taxpayer Survey Questionnaire'' |
| ( 2010, Vol. 30 No.2 ) |
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| This paper uses a unique survey questionnaire to assess the impact of the 2002 French tax cut on consumption. I find that the proportion of "spender" consumers as opposed to "Ricardian" consumers is relatively high, with 52.7 per cent of the households declaring that they consume their tax cuts. I also find evidence that the average marginal propensity to consume tax cuts (76.5%) is significantly greater than the average marginal propensity to consume temporary rises in earnings (42.4%). This result is consistent with the PIH. Furthermore, the smaller the tax cut, the greater this gap; and the higher the family earnings, the higher the marginal propensity to consume tax cuts, which invalidates the effect of liquidity constraints on consumption in that context. |
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| Keywords: income tax cut; consumption; survey questionnaire; PIH; liquidity constraints |
JEL: D1 - Household Behavior: General
H2 - Taxation, Subsidies, and Revenue: General |
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| Manuscript Received : Dec 17 2009 | | Manuscript Accepted : May 25 2010 |
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