Spend as you were told: Evidence from labeled COVID-19 stimulus payments in South Korea

Seonghoon Kim, Kanghyock Koh, Wonjun Lyou

Research output: Contribution to journalArticlepeer-review


We test the income fungibility assumption from standard economic theory by analyzing spending responses to South Korea's labeled COVID-19 stimulus payments. We exploit unique policy rules for identification: (1) recipients cannot use payments outside their province of residence, and (2) they can only use payments at establishments in pre-specified sectors. Using data on card transactions in Seoul, we find that households do not consider stimulus payments fungible. Compared to Seoul residents’ benchmark spending responses to cash income gains by sector, the stimulus payments disproportionately increased Seoul residents’ spending in the allowed sector compared to the non-allowed sector. The payments did not increase non-Seoul residents’ card spending. Our results imply that labeled stimulus payments with usage restrictions can boost household consumption spending in targeted sectors or locations during economic recessions.

Original languageEnglish
Article number104867
JournalJournal of Public Economics
Publication statusPublished - 2023 May


  • COVID-19 stimulus payments
  • Card transaction data
  • Income fungibility
  • Spending

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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