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This paper explores the impact of two fiscal programs, the Economic Impact Payments and the Paycheck Protection Program, on vehicle purchases and relates our findings to post-pandemic price pressures. We find that receiving a stimulus check increased the probability of purchasing new vehicles. In addition, the disbursement of funds from the Paycheck Protection Program was associated with a rise in local new car registrations. Our estimates indicate that these two programs account for a boost of 1 3/4 million units—or 12 percent—to new car sales in 2020. Furthermore, the induced boost in sales coincided with the presence of significant production constraints and exacerbated an inventory drawdown, thereby contributing to the rapid increase in new vehicle prices that prevailed in the subsequent years.
Dunbar et al. (Fri,) studied this question.