Many families in Europe and North America have substantial assets in the form of housing and retirement accounts but little in the way of liquid wealth or credit facilities to offset short-term income falls. This research shows that these households respond strongly to receiving temporary government transfers, boosting the economy through increased consumption. The findings have far-reaching implications for the design of fiscal stimulus policies in a recession.
What have been the economic impacts of existing government tax and expenditure programs? Among the topics to be covered:
• To what degree have existing social insurance programs such as Social Security, disability insurance, and unemployment insurance helped stabilize household consumption? What economic distortions are created in the process?
• How can the provision of key public services such as education and health care be made more cost effective?
• How have existing safety-net programs done in alleviating poverty and improving the future success of poor children? To what degree do these programs distort household incentives?
• What have been the economic impacts of recent and proposed tax reforms?
Does greater regulation of consumer financial products actually benefit consumers? This research, analyzing the CARD act enacted in the U.S. in 2009, suggests that it does. In particular, the act’s restrictions on hidden credit card fees were found to reduce borrowing costs (especially for consumers with low credit scores) without increasing interest charges and other fees and without reducing access to credit.