Question #4 Based on: Johnson, David S., Jonathan A. Parker, and Nicholas S. Souleles. "Household expenditure and the income tax rebates of 2001." American Economic Review 96.5 (2006): 1589-1610. (Pages 1589-1602 Only) (14 pages) https://www.aeaweb.org/articles?id=10.1257/aer.96.5.1589 A. Johnson, Parker and Souleles (2006) study how household consumption responds to economic stimulus payments. Summarize in a few sentences their main conclusions. B. What do these conclusions imply about how one might wish to target a potential future fiscal stimulus across individuals in the population? C. (HARDER) Suppose Johnson, Parker and Souleles (2006) had data on income and consumption over time for every household. An earlier paper in the economics literature estimated the marginal propensity to consume (MPC) by studying the response of consumption to changes in income for all changes in income (as opposed to only those associated with a tax rebate). The estimates in this alternative paper are more precise-they have lower standard errors than Johnson, Parker and Souleles (2006). Yet, Johnson, Parker and Souleles' approach of only using income changes associated with tax rebates is generally viewed as providing more definitive evidence on the magnitude of the MPC. Why? [HINT: What might cause changes in income aside from the tax rebates? What if these other sources of changes in income have more persistent effects? There is more than one potential argument here.]