Consumption Stimulus with Digital Coupons: Heterogeneity and Policy Design
We study consumption stimulus using digital coupons, which provide time-limited subsidies contingent on minimum spending. Analyzing a large-scale program in China, we find that the program generates large and heterogeneous short-term effects. Consumption responses vary across both consumers and locations, reflecting both demand-side and supply-side factors. This heterogeneity shapes the incidence of the program: high-response consumers tend to patronize larger businesses, leading to a regressive allocation of stimulus benefits. Through counterfactual analysis, we show that targeting rules can reshape both the size and distribution of stimulus effects. Targeting the most responsive consumers can more than double the aggregate stimulus, while a hybrid design that combines targeted distribution with direct support to small businesses improves both efficiency and equity.