An income transfer contains less fiscal stimulus than an increase in government spending of the same size.
When government spending increases,the initial spending injection will be equal to the change in spending.Only part of an initial income transfer is used to increase consumption; the remainder is saved.Accordingly,the initial spending injection is less than the change in income transfers.This makes transfer payments less stimulative than government purchases of equal size.

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When government spending increases, it provides a larger initial spending injection compared to income transfers. This makes income transfers less stimulative than government spending of equal size.

An Income Transfer Contains Less Fiscal Stimulus Than an Increase