How do government transfer payments affect retail prices and welfare? Evidence from SNAP q

We study the effect of the Supplemental Nutrition Assistance Program (SNAP) on retail prices nationwide. State-level program adjustments motivate our identification strategy. A 1% increase in benefits per population raises grocery prices by a persistent 0.08%. A calibrated partial-equilibrium model implies a marginal benefit dollar raises a recipient's consumer surplus from groceries by $0.7, producer surplus by $0.5, and lowers each non-SNAP consumer's surplus by $0.05, because of a large marginal-propensity-to-con sume-food out of SNAP, low elasticities of demand, and moderate market power. To guarantee the real intended spending power on food, benefits should be increased by 7%. (c) 2022 Elsevier B.V. All rights reserved.