Fiscal stimulus and debt burden: evidence from Thailand’s first-car-buyer tax rebate program
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This paper examines the extent to which a fiscal stimulus involving durable goods induces financial distress and causes debt burden. Using account-level loan data to study the impact of Thailand’s first-car-buyer tax rebate scheme at both individual and postcode levels, we find that the program led to higher loan delinquency and crowded out other loan originations, which are symptoms implied by excessive debt burden. The adverse impacts were more pronounced for passenger car buyers than for truck buyers and there were local negative spillovers to non-participants. Our findings raise questions about the merit of promoting economic growth by inducing debt-fueled spending and suggest that the design of durable goods stimulus policy should focus more on productive business durables than on consumer durables.
KeywordsFiscal stimulus Debt burden Tax rebate Durable goods Household debt Delinquency Credit bureau data
JEL ClassificationD12 E62 E65 H31
We would like to thank Thailand’s National Credit Bureau for providing us with the data used in this study as well as useful advice. We are grateful to Atchana Lamsam for her collaboration and insights on the NCB data. Sirirat Sonjai and Bhumjai Tangsawasdirat provided excellent research assistance.
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