During the COVID-19 pandemic, both China and the United States tried to keep their economies humming using fiscal stimulus. The US’s plan relied heavily on broad-based cash giveaways to consumers, but China’s featured a more targeted approach using digital coupons with defined spending minimums. Harbin Institute of Technology’s Jing Ding, Tsinghua University’s Lei Jiang, Chicago Booth PhD student Lucy Msall, and Booth’s Matthew Notowidigdo find that the coupon programs were a cost-effective strategy that also prevented people from simply parking stimulus funds in their savings accounts. The research suggests policy makers should consider similarly targeted approaches in future efforts to jump-start economic activity.

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