Japanese Consumption Boost from Tax Cuts Overestimated, Study Finds
The article explores how habits in spending can affect people's behavior when it comes to saving and consuming money. The researchers suggest that strong habits can lead to people saving more money even when their income increases. This means that a permanent tax cut may not necessarily lead to a significant increase in spending. In fact, the study indicates that in Japan, a permanent tax cut may only result in a 30% increase in spending, which challenges the idea that tax cuts can quickly boost the economy.