A Study on the Policy of Consumption Vouchers
Date Issued
2010
Date
2010
Author(s)
李如玉
Abstract
In 2008, as a financial tsunami swept the world, many believed the root of the problem was the subprime mortgage crisis in the United States. Ripples spread around the entire world - bankrupting a country, governments and many financial institutions. In an already weakened economic environment, investors continued to lose confidence, unemployment soared to an all time high and consumer spending continued to shrink. Thus economic growth continued to spiral downward. After careful consideration of all economic indicators and approaches taken by other countries, the Taiwan government launched the Consumption Voucher Policy in a short period of time. Every eligible resident received TWD $3,600 as a spending voucher. The Taiwan government thus injected roughly TWD $83.263 billion via 23,128,527 residents hoping to bolster consumer confidence, increase consumer spending, and stimulate economic growth via the multiplier effect.
The scope of this study is focusing on the causes and effectiveness of the program, and summarizing the data collected to record the first issuance of consumption vouchers.
Immediately following the initial issuance of consumption vouchers in January 2009, domestic sales is higher than every month of the prior year. However, by the end of the first quarter 2009, more than 70% of the consumption vouchers were redeemed. Due to the high initial rate of redemption and thus short lived increase in consumer spending, the multiplier effect was less significant than expected.
By comparing the voucher program with similar subsidy programs adopted by other countries, it is found that the voucher system is a far better approach than either a tax refund or cash reward. Addition restrictions on voucher redemption could be incorporated to target selected industries and thus prolong the increase in domestic spending, enhancing the multiplier effect and develop the supply chains of key industries
The issuance of the consumption voucher which helped to stop the economic free fall by encouraging consumer spending, also demonstrated government efficiency and exhibited cooperation among government authorities and people, all contributing to successfully fulfilling its short term goal.
Subjects
consumption voucher
multiplier effect
GDP
Home Appliance Subsidy Program for Rural Areas
tax refund
subsidy
SDGs
Type
thesis
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