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Household spending and fiscal support during the pandemic – the role of public perceptions

Author

Listed:
  • Georgarakos, Dimitris
  • Kenny, Geoff

Abstract

The coronavirus (COVID-19) pandemic shock posed an enormous challenge to fiscal policy in supporting household consumption. In this analysis, we report the results of a recent study (Georgarakos and Kenny, 2022) on the extent to which the pandemic-related fiscal interventions influenced consumers’ spending behaviour. The study finds that improving public perceptions about the adequacy of fiscal interventions incentivises spending. Importantly, this perceptions channel operates equally strongly for consumers who receive government support and for those who do not. Consumers who view the adequacy of fiscal packages more favourably also expect higher future incomes and easier access to credit, while they do not anticipate an increase in taxes. JEL Classification: D12, E12, H31

Suggested Citation

  • Georgarakos, Dimitris & Kenny, Geoff, 2022. "Household spending and fiscal support during the pandemic – the role of public perceptions," Research Bulletin, European Central Bank, vol. 94.
    • Handle: RePEc:ecb:ecbrbu:2022:0094:
    Note: 483508
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    Citations

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    Cited by:

    1. Dimitris Georgarakos & Tullio Jappelli & Geoff Kenny & Luigi Pistaferri, 2023. "Labor Supply Response to Windfall Gains," CSEF Working Papers 682, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Weber, Michael & Candia, Bernardo & Ropele, Tiziano & Lluberas, Rodrigo & Frache, Serafin & Meyer, Brent & Kumar, Saten & Gorodnichenko, Yuriy & Georgarakos, Dimitris & Coibion, Olivier & Kenny, Geoff, 2023. "Tell Me Something I don't Already Know: Learning in Low and High-inflation Settings," CEPR Discussion Papers 18299, C.E.P.R. Discussion Papers.
    3. Zeqiraj, Veton & Gurdgiev, Constantin & Sohag, Kazi & Hammoudeh, Shawkat, 2024. "Economic uncertainty, public debt and non-performing loans in the Eurozone: Three systemic crises," International Review of Financial Analysis, Elsevier, vol. 93(C).
    4. Georgarakos, Dimitris & Gorodnichenko, Yuriy & Coibion, Olivier & Kenny, Geoff, 2024. "The Causal Effects of Inflation Uncertainty on Households' Beliefs and Actions," IZA Discussion Papers 17317, Institute of Labor Economics (IZA).
    5. Ambrocio, Gene & Hasan, Iftekhar, 2022. "Belief polarization and Covid-19," Bank of Finland Research Discussion Papers 10/2022, Bank of Finland.
    6. Meinerding, Christoph & Poinelli, Andrea & Schüler, Yves, 2023. "Households’ inflation expectations and concern about climate change," European Journal of Political Economy, Elsevier, vol. 80(C).

    More about this item

    Keywords

    Consumer Expectations Survey; COVID-19; Fiscal Policy; Household Spending; Public Perceptions;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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