Consumption Stimulus with Digital Coupons

We study consumption stimulus with digital coupons, which provide time-limited subsidies contingent on minimum spending. We analyze a large-scale program in China and present five main findings: (1) the program generates large short-term effects, with each $\mathrm{\yen }$1 of government subsidy inducing $\mathrm{\yen }$3.4 in consumer spending; (2) consumption responses vary substantially, driven by both demand-side factors (e.g., wealth) and supply-side factors (e.g., local consumption amenities); (3) The largest spending increases occur among consumers whose baseline spending already exceeds coupon thresholds and for whom coupon subsidies should be equivalent to cash, suggesting behavioral motivations; (4) high-response consumers disproportionately direct their spending toward large businesses, leading to a regressive allocation of stimulus benefits; and (5) targeting the most responsive consumers can double total stimulus effects. A hybrid design combining targeted distribution with direct support to small businesses improves both the efficiency and equity of the program.