Did the 2001 Tax Rebate Stimulate Spending? Evidence from Taxpayer Surveys

Many households received rebate checks in 2001 as advanced payments of the benefit of the new 10 percent federal income tax bracket. A survey conducted at the time the rebates were mailed finds that few households said that the rebate led them mostly to increase spending. A follow-up survey in 2002 as well as a similar survey conducted after the attacks of 9/11 also indicates low spending rates. This paper investigates the robustness of these survey responses and evaluates whether such surveys are useful for policy evaluation. It also draws lessons from the surveys for macroeconomic analysis of the tax rebate.