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The Effect Of The Covid-19 Pandemic On Consumer Savings And Retail Sales: Evidence From A Postcommunist Transition Economy

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Listed:
  • Ardian Harri
  • Drini Imami
  • Edvin Zhllima

Abstract

When coupled with strong external shocks such as COVID-19, the high levels of uncertainty that characterise fragile economies can have a strong impact on household consumption and saving behaviour. This paper analyses household consumption and saving behaviour in conjunction with COVID-19 in the context of a post-communist economy. Models and intervention analysis are used to identify the effect of catastrophic events such as the COVID-19 pandemic on two key macroeconomic measures for the Albanian economy. The findings show that the pandemic period caused a significant contraction of consumer spending and a significant increase in savings. Higher uncertainty appears to have been a key driver of such household behaviour. The effect on savings will endure in the long run, while retail trade is expected to recover. These findings call for a more astute use of fiscal and monetary policies to address the harmful emerging short-run effect of reduced household spending.

Suggested Citation

  • Ardian Harri & Drini Imami & Edvin Zhllima, 2022. "The Effect Of The Covid-19 Pandemic On Consumer Savings And Retail Sales: Evidence From A Postcommunist Transition Economy," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 39-60, April – J.
    • Handle: RePEc:beo:journl:v:67:y:2022:i:233:p:39-60
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Albania; ARIMA modelling; catastrophic events; COVID-19 pandemic; intervention analysis;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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