Steindel's paper focuses on the interaction of tax and transfer programs and consumer spending. The issue has attracted increased attention in the United States as a result of simultaneity of the first US recession in a decade and of the 2001 tax cut. Steindel points out that while the US...

Many supporters of the tax cut enacted this summer viewed it as an important stimulus to consumer spending. But an analysis of the effects of earlier income tax cuts suggests that the consumer response to such initiatives is, in fact, quite variable. Two conclusions stand out: First, consumers...