Abstract:This paper examines the effects of a vehicle subsidy program introduced in Korea in the wake of the 2008 global recession. I adopt a simple binary choice model to approximate a household's decision to purchase a new car and identify the policy effect using a difference-in-difference framework in which non-eligible households serve as the control group. The estimation results are as follows. First, the subsidy program significantly boosted the overall demand for new vehicles, increasing the average probability … Show more
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