So Kubota, Koichiro Onishi, Yuta Toyama, 27 January 2021

To mitigate the impact of the COVID-19 economic recession, many countries provided financial support to individual households. This column examines a Japanese entitlement programme that distributed a fixed and sizable cash sum to all residents during the crisis. Using data from 2.8 million anonymised bank transactions and a natural experimental design, the authors suggest that payments from the programme resulted in significant spending responses, particularly from households that suffered liquidity constraints and income loss in 2020. The column also maps the implications of counterfactual targeting policies.

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