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Macro and Micro Consumption Drivers in the Wake of the COVID-19 Pandemic

Author

Listed:
  • Elisa Guglielminetti

    (Bank of Italy)

  • Concetta Rondinelli

    (Bank of Italy)

Abstract

In this paper, we investigate the drivers of household consumption in the wake of the COVID-19 pandemic, focusing on Italy. We combine a macro and a micro approach and find that the deterioration in economic conditions can only explain about half of the slump in consumption, both at the aggregate and at the individual level; increased income and health risks significantly affect spending decisions, with heterogeneous impacts across expenditure categories and household types. At the micro level, the unemployed reduce spending for economic reasons, while the self-employed are mainly discouraged by health risks and uncertainty; restrictive measures play a minor role.

Suggested Citation

  • Elisa Guglielminetti & Concetta Rondinelli, 2024. "Macro and Micro Consumption Drivers in the Wake of the COVID-19 Pandemic," International Journal of Central Banking, International Journal of Central Banking, vol. 20(1), pages 181-237, February.
    • Handle: RePEc:ijc:ijcjou:y:2024:q:1:a:5
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    References listed on IDEAS

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    1. Bachmann, Rüdiger & Born, Benjamin & Goldfayn-Frank, Olga & Kocharakov, Georgi & Luetticke, Ralph & Weber, Michael, 2021. "A Temporary VAT Cut as Unconventional Fiscal Policy," CEPR Discussion Papers 16690, C.E.P.R. Discussion Papers.
    2. Guerino Ardizzi & Andrea Nobili & Giorgia Rocco, 2020. "A game changer in payment habits: evidence from daily data during a pandemic," Questioni di Economia e Finanza (Occasional Papers) 591, Bank of Italy, Economic Research and International Relations Area.
    3. Lisa Rodano & Concetta Rondinelli, 2014. "The Italian Household Consumption: A Comparison Among Recessions," Politica economica, Società editrice il Mulino, issue 2-3, pages 203-234.
    4. Asger Lau Andersen & Emil Toft Hansen & Niels Johannesen & Adam Sheridan, 2020. "Pandemic, Shutdown and Consumer Spending: Lessons from Scandinavian Policy Responses to COVID-19," Papers 2005.04630, arXiv.org.
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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