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Can Stimulus Checks Boost an Economy Under Covid-19? Evidence from South Korea

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  • Moon Jung Kim
  • Soohyung Lee

Abstract

Various countries have implemented transfer programs to individuals since the Covid-19 outbreaks. However, the extent to which such transfers alleviate economic recessions is unclear. This paper analyzes a South Korean program, which provided vouchers redeemable only at small local businesses. We find that, due to the program, over 30% of households across all income groups increased their food and overall household spending, but the usage restriction may have affected consumer choice as well as competition among businesses. While the employment and sales of small businesses improved, the program’s fiscal sustainability is in question because of the large tax exemption.

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  • Moon Jung Kim & Soohyung Lee, 2021. "Can Stimulus Checks Boost an Economy Under Covid-19? Evidence from South Korea," International Economic Journal, Taylor & Francis Journals, vol. 35(1), pages 1-12, January.
    • Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:1-12
    DOI: 10.1080/10168737.2020.1864435
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    Cited by:

    1. Jung, Haeil & Kim, Jun Hyung & Hong, Gihyeon, 2023. "Impacts of the COVID-19 crisis on single-person households in South Korea," Journal of Asian Economics, Elsevier, vol. 84(C).
    2. Choi, Hoon, 2021. "The effect of COVID-19 stimulus payments on sales of local small businesses: Quasi-experimental evidence from Korea," MPRA Paper 108587, University Library of Munich, Germany.
    3. Daigo Nakata, 2023. "Emergency Economic Response and Evaluation in the COVID-19 Crisis," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 19(4), pages 1-25, November.
    4. Zihao Yang & Ramayya Krishnan & Beibei Li, 2024. "The Interplay Between Individual Mobility, Health Risk, and Economic Choice: A Holistic Model for COVID-19 Policy Intervention," INFORMS Joural on Data Science, INFORMS, vol. 3(1), pages 6-27, April.
    5. Myunggu Jung & D. Susie Lee, 2023. "Subnational variations in births and marriages during the COVID-19 pandemic in South Korea," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 48(30), pages 867-882.
    6. Bernard, René, 2023. "Mental accounting and the marginal propensity to consume," Discussion Papers 13/2023, Deutsche Bundesbank.
    7. Hoyong Jung, 2023. "Can Universal Cash Transfer Save Newborns’ Birth Weight During the Pandemic?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(1), pages 1-22, February.
    8. Sun Yeop Lee & Sun Kim & Woong-Han Kim & Jongho Heo, 2022. "Employment, Economic, and Sociodemographic Factors Associated with Changes in Smoking and Drinking Behaviors during the COVID-19 Pandemic in South Korea," IJERPH, MDPI, vol. 19(5), pages 1-14, February.

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