Nanyang Business School
Nanyang Technological University
Institutional Affiliation: Nanyang Technological University
NBER Working Papers and Publications
|September 2018||Asymmetric Consumption Smoothing|
with Brian Baugh, Itzhak Ben-David, Jonathan A. Parker: w25086
In data from an account aggregator, households increase consumption when they receive (expected) tax refunds, as if they are liquidity constrained. However, this behavior is not due to liquidity constraints or hand-to-mouth behavior. These same households smooth consumption when making payments in other years, primarily by transferring funds among liquid accounts. Further, even households carrying credit card debt smooth consumption when making payments, and even high-liquidity households spend out of refunds. Thus the households we study follow a heuristic of spending out of increases in liquidity, while at the same time acting in anticipation of payments to maintain stable consumption.
|April 2014||Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax”|
with Brian Baugh, Itzhak Ben-David: w20052
For years, online retailers have maintained a price advantage over brick-and-mortar retailers by not collecting sales tax at the time of sale. Recently, several states have required that online retailer Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduced Amazon purchases by 9.4% after sales tax laws were implemented, implying elasticities ranging from –1.2 to –1.4. The effect is more pronounced for large purchases, for which we estimate a reduction of 29.1% in purchases, corresponding to an elasticity of –3.9. Studying competitors in the electronics field, we detect some evidence of substitution toward competing retailers.
Published: BRIAN BAUGH & ITZHAK BEN-DAVID & HOONSUK PARK, 2018. "Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax”," The Journal of Finance, vol 73(4), pages 1819-1855. citation courtesy of
|January 2014||Disentangling Financial Constraints, Precautionary Savings, and Myopia: Household Behavior Surrounding Federal Tax Returns|
with Brian Baugh, Itzhak Ben-David: w19783
We explore household consumption surrounding federal tax returns filings and refunds receipt to test various theories of consumption. Because uncertainty regarding the refund is resolved at filing, precautionary savings theory predicts an increase in consumption at this date. Contrary to this prediction, we find that households generally do not increase consumption at filing. Following the receipt of the refunds, consumption of both durables and nondurables increases dramatically and then decays quickly. Our results show that households, on average, are financially constrained, exhibit myopic behavior, and do not respond to precautionary savings motives.