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Disentangling Financial Constraints, Precautionary Savings, and Myopia: Household Behavior Surrounding Federal Tax Returns / Brian Baugh, Itzhak Ben-David, Hoonsuk Park.
- Format:
- Book
- Author/Creator:
- Baugh, Brian.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w19783.
- NBER working paper series no. w19783
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Disentangling Financial Constraints, Precautionary Savings, and Myopia
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2014.
- Summary:
- 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.
- Notes:
- Print version record
- January 2014.
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