Effects of the 2009 Scrappage Premium on German Households’ Consumption Patterns
Abstract: We use the German Socio-Economic Panel (GSOEP) to analyze household consumption spending reactions to the German 2009 car scrappage scheme. The subsidy meant a windfall gain to concerned households and a rational reaction would be to adjust the consumption path to the increase in permanent income. Applying regression methods, we model different categories of consumption spending (nondurables, durables, services, and overall consumption) as a function of the scrappage dummy, the household income and further controls for the respective household and its head and evaluate differences of household consumption spending between subsidized and non-subsidized car buyers.