Thread by @pleh_mann

Car scrapping subsidies are getting en vouge again to help car manufacturers through the economic crisis produced by #COVID19. Here's a quick review of the very mixed empirical evidence regarding the economic and environmental performance of this policy. Thread 1/11

2/11 Program analyzed: 1994-1996 scrappage subsidy in France
Economic stimulus effect: positive in the short run, zero in the long run
Environmental stimulus effect: not assessed
journals.uchicago.edu/doi/abs/10.108…

3/11: Program analyzed: 2009 US Cash for Clunkers
Economic stimulus effect: zero in the short and long run
Environmental stimulus effect: positive but small
sciencedirect.com/science/articl…

4/11: Program analyzed: 2009 US Cash for Clunkers
Economic stimulus effect: positive in the short run, zero in the long run
Environmental stimulus effect: not assessed
academic.oup.com/qje/article-ab…

5/11 Program analyzed: 2009 US Cash for Clunkers
Economic stimulus effect: positive in the short run, zero in the long run
Environmental stimulus effect: not assessed
onlinelibrary.wiley.com/doi/abs/10.111…

6/11 Program analyzed: 2009 US Cash for Clunkers
Economic stimulus effect: positive in the short run, negative in the long run
Environmental stimulus effect: not assessed
aeaweb.org/articles?id=10…

7/11 Program analyzed: 2009 scrapping subsidies in EU countries
Economic stimulus effect: positive in the short run, long run not assessed
Environmental stimulus effect: zero (slightly positive if subsidies were targeted)
sciencedirect.com/science/articl…

8/11 Program analyzed: 2009 scrapping subsidies in Germany
Economic stimulus effect: positive
Environmental stimulus effect: negative
mpra.ub.uni-muenchen.de/88175/

9/11 Program analyzed: 2009 scrapping subsidies in Germany
Economic stimulus effect: positive in the short and long run
Environmental stimulus effect: not assessed
econstor.eu/handle/10419/5…

10/11 Wrap-up I: Scrapping subsidies often only have a short-term economic stimulus effect, which is later on compensated by lower sales. Environmental benefits may well be negative. If they are positive, they are small.

11/11 Wrap-up II: Importantly, all studies lack a counterfactual analysis: What would have been the benefits of alternative ways of government spending? What would have been alternative (possibly cheaper) policies to reduce emissions?

"Vogue" not "vouge" of course 🥴