Abstract:
“Cash-for-Clunkers”
was a $3 billion program that attempted to stimulate the U.S. economy
and improve the environment by encouraging consumers to retire older
vehicles and purchase fuel-efficient new vehicles. We investigate the
effects of this program on new vehicle sales and the environment. Using
Canada as the control group in a difference-in-differences framework, we
find that, of the 0.68 million transactions that occurred under the
program, the program increased new vehicle sales only by about 0.37
million during July and August of 2009, implying that approximately 45
percent of the spending went to consumers who would have purchased a new
vehicle anyway. Our results cannot reject the hypothesis that there is
little or no gain in sales beyond 2009. The program will reduce CO2
emissions by only 9–28.2 million tons based on upper and lower bounds
of the estimate of the program effect on sales, implying a cost per ton
ranging from $92 to $288 even after accounting for reduced criteria
pollutants.
- Fig. 1. Timeline of the Cash-for-Clunkers program.
- Fig. 4. Pre-program monthly new vehicle sales after controlling for observables.
- Fig. 5. Sales effect over time using the full sample. Note: The plots show the program effect on vehicle sales from June to December of 2009.
- by Shanjun Lia,
, Joshua Linnb,
- a Dyson School of Applied Economics and Management at Cornell University, 424 Warren Hall, Ithaca, NY 14853, USA
- b Resources for the Future (RFF), 1616P Street NW, Washington, DC 20036, USA
- Journal of Environmental Economics and Management
- via Elsevier Science Direct www.ScienceDirect.com
- Available online 20 August 2012; In Press, Corrected Proof
- Keywords: Stimulus; Cash-for-Clunkers; Auto demand; CO2 emissions
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