variable is $ \left(\frac{Taxcut_{h,t}}{Monthly Income_{h}}\right) $ , which is the total value of tax cut amount received by a household relative to its monthly income. Since a household receives the tax cut benefit over several months, the numerator is the cumulative of tax cut amount. Similarly, (7-1) becomes as follows for the coupon case.

$$ \left(7-2\right)\ln\left(\frac{C_{h,t(afterFebruary)}}{C_{h,January}}\right)=a_{1}\cdot\left(\frac{COUPON_{h}}{Monthly Income_{h}}\right)+Z_{h,t}^{^{\prime}}\cdot a_{2}+Year_{t}^{^{\prime}}\cdot a_{3}+\varepsilon_{t+1} $$

We also tried specifications that replace MonthlyInc ome_{h} by Consumption_{h}.

$$ \begin{aligned}\ln\Bigg(\frac{C_{h,t(afterFebruary)}}{C_{h,January}}\Bigg)=&a_{1}\cdot\Bigg(\frac{Taxcut_{h,t}}{Consumption_{h}}\Bigg)+a_{2}\cdot\Bigg(\frac{Other_{h,t-1}}{Consumption_{h}}\Bigg)+\\&Z_{h,t}^{\quad^{\prime}}\cdot a_{3}+Year_{t}^{\quad^{\prime}}\cdot a_{4}+\varepsilon_{t+1}\end{aligned} $$

$$ \ln\left(\frac{C_{h,t(afterFebruary)}}{C_{h,January}}\right)=a_{1}\cdot\left(\frac{COUPON_{h}}{Consumption_{h}}\right)+Z_{h,t}^{^{\prime}}\cdot a_{2}+Year_{t}^{^{\prime}}\cdot a_{3}+\varepsilon_{t+1} $$

In what follows, the upper tables for the 1998 tax cut include other income as a controlling variable, and the upper tables for the 1999 coupon program use the January-June panel. Those two results in upper tables are used to compare the effects between the two different policies. Table 5-(1), the month-to-month method, indicates that the sum of elasticity over first two months are slightly larger for the 1998 tax cut than that for the 1999 coupon program. The coefficients on semi-durables are unstable with large standard error for the 1998 tax cut while those are positive and large in earlier months for the 1999 coupon program. On the contrary, the coefficient on services in the second month is large and marginally significant for the 1998 tax cut while those are small and insignificant for the 1999 coupon program. Table 5-(2), the month-to-month method that uses consumption as a normalization variable, indicates that the sum of elasticity over first two months are almost identical. The pattern of the coefficients on semi-durables (observed in Table 5-(1)) holds for this case, and the coefficients on services are larger for the 1998 tax cut than the 1999 coupon program.

Table 5-(3) and (4) report the results based on the cumulative method. Roughly speaking, the pattern discussed above holds again, though the estimated elasticity of total consumption in the first month is smaller for the 1998 tax cut and the elasticity becomes smaller for semi-durables and larger for services in the 1999 coupon program.

### 6. Conclusion

This paper analyzed the effect of the 1998 tax cut on consumption, and found that consumers responded to the 1998 tax cut with the implied MPC to tax cut benefit of 0.6 on impact but the MPC declined in subsequent months. Consumers spent the tax cut benefits on services and non-durables, but not on semi-durables observed in the shopping coupons program. An application of the same specification both to the 1998 tax cut and to the 1999 shopping coupons program demonstrates that