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The double impact of deep social unrest and a pandemic: Evidence from Chile

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  • Carlos Madeira

Abstract

This work studies the impact of the Social Explosion and COVID‐19 crisis on the household sector in Chile. The Social Explosion in October 2019 represented a mass protest, much larger than similar events in other nations such as the yellow jackets. Using delinquency models calibrated with survey data, I show that household debt risk increased substantially after the Social Explosion across all income backgrounds but fell slightly with the COVID‐19 pandemic due to the public policies implemented. The expansion of the public support policies in August 2020 decreased the debt risk to levels similar to before the two crises. Impact conjugué d'un profond malaise social et d'une pandémie : l'exemple du Chili. Cet article étudie l'impact lié à l'explosion sociale et à la crise de la COVID‐19 sur le secteur des ménages au Chili. Les troubles sociaux ayant secoué le pays en octobre 2019 se sont traduits par un mouvement de protestation populaire d'une ampleur bien supérieure à d'autres manifestations comparables à travers le monde, notamment celle des gilets jaunes. Grâce à des modèles de défaillance calibrés à des données d'enquête, je montre qu'après cette période d'agitation sociale, le risque d'endettement des ménages s'est considérablement accru pour toutes les tranches de revenu mais qu'à la faveur des politiques publiques mises en œuvre, celui‐ci a légèrement diminué avec la pandémie de COVID‐19. L'élargissement des politiques publiques d'accompagnement d'août 2020 ont permis de réduire le risque d'endettement à des niveaux similaires à ceux observés avant les deux crises.

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  • Carlos Madeira, 2022. "The double impact of deep social unrest and a pandemic: Evidence from Chile," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 135-171, February.
    • Handle: RePEc:wly:canjec:v:55:y:2022:i:s1:p:135-171
    DOI: 10.1111/caje.12570
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    1. Madeira, Carlos & Salazar, Leonardo, 2023. "The impact of monetary policy on a labor market with heterogeneous workers: The case of Chile," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 4(2).
    2. Carlos Madeira, 2023. "The evolution of macroprudential policy use in Chile, Latin America and the OECD," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(3), pages 357-380, September.
    3. Carlos Madeira, 2024. "The effect of Covid pension withdrawals and the Universal Guaranteed Pension on the income of future retirees in Chile," BIS Working Papers 1176, Bank for International Settlements.
    4. Benjamín García & Mario González & Sebastián Guarda & Manuel Paillacar, 2022. "Unconventional credit policies during crises: A structural analysis of the Chilean experience during the COVID-19 pandemic," Working Papers Central Bank of Chile 954, Central Bank of Chile.
    5. Madeira, Carlos, 2023. "The evolution of consumption inequality and risk-insurance in Chile," Emerging Markets Review, Elsevier, vol. 54(C).
    6. Madeira, Carlos, 2022. "The impact of the Chilean pension withdrawals during the Covid pandemic on the future savings rate," Journal of International Money and Finance, Elsevier, vol. 126(C).
    7. Hernández, Karla & Luna, Facundo & Madeira, Carlos, 2022. "Climate change’s impact on real estate prices in Chile," MPRA Paper 118974, University Library of Munich, Germany.

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