Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies / Jerome Adda, Russell Cooper.

Format:

Book

Author/Creator:

Adda, Jerome.

Contributor:

National Bureau of Economic Research.

Cooper, Russell.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6048.

NBER working paper series no. w6048

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Balladurette and Juppette

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1997.

Summary:

This paper studies the effects of subsidies on durable goods markets. In particular, we study a recent policy in France in which the governments of Balladur and Jupp, subsidized the replacement of old cars with new ones. To study this policy, we construct a dynamic stochastic discrete choice model of car ownership at the household level. The resulting decision rules and equilibrium conditions are used to estimate, using aggregate data, the underlying parameters of the model. These policy functions are used to evaluate the short and long run effects of the French policies. We find that these policies do stimulate the automobile sector in the short run but, through the induced changes in the cross sectional distribution of car ages, create the basis for subsequent low activity. Further, while these policies increase government revenues in the short run, revenues in the long run are lower relative to a baseline without intervention.

Notes:

Print version record

May 1997.