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A The Impact Of Covid-19 Lockdowns On Household Income, Consumption, And Expectation: Evidence From High

Author

Listed:
  • Masagus M. Ridhwan

    (Bank Indonesia)

  • Jahen F. Rezki

    (Institute for Economic and Social Research)

  • Asep Suryahadi

    (SMERU Research Institute)

  • Arief Ramayandi

Abstract

We investigate the causal impact of COVID-19, through lockdowns, on household income, consumption, and expectations in Indonesia, using high frequency data from the monthly Bank Indonesia consumer survey with more than 176,000 respondents. We find that COVID-19 lockdown has a large and significant negative impact on households’ income and consumption. Moreover, COVID-19 lockdown also negatively affects expected income. This study also finds that households try to smooth consumption in the face of declining income, resulting in a significant increase in the budget allocation for consumption while reducing the shares of debt installments and savings. The impact of lockdown on households is also heterogeneous by expenditure levels, regions, and level of education. These findings have important policy implications to cushion the pandemic’s impact on vulnerable households and ensure a more inclusive recovery.

Suggested Citation

  • Masagus M. Ridhwan & Jahen F. Rezki & Asep Suryahadi & Arief Ramayandi, 2021. "A The Impact Of Covid-19 Lockdowns On Household Income, Consumption, And Expectation: Evidence From High," Working Papers WP/07/2021, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp072021
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    References listed on IDEAS

    as
    1. Askitas, Nikos & Tatsiramos, Konstantinos & Verheyden, Bertrand, 2020. "Lockdown Strategies, Mobility Patterns and COVID-19," IZA Discussion Papers 13293, Institute of Labor Economics (IZA).
    2. Damian Clarke & Kathya Tapia-Schythe, 2021. "Implementing the panel event study," Stata Journal, StataCorp LP, vol. 21(4), pages 853-884, December.
    3. Coibion, Olivier & Gorodnichenko, Yuriy & Weber, Michael, 2020. "The Cost of the COVID-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending," Department of Economics, Working Paper Series qt4jn1x65h, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    4. Jeehoon Han & Bruce D. Meyer & James X. Sullivan, 2020. "Income and Poverty in the COVID-19 Pandemic," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 85-118.
    5. Crossley, Thomas F. & Fisher, Paul & Low, Hamish, 2021. "The heterogeneous and regressive consequences of COVID-19: Evidence from high quality panel data," Journal of Public Economics, Elsevier, vol. 193(C).
    6. Pushan Dutt & V. Padmanabhan, 2011. "Crisis and Consumption Smoothing," Marketing Science, INFORMS, vol. 30(3), pages 491-512, 05-06.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Masagus M. Ridhwan & Asep Suryahadi & Jahen F. Rezki & Immanuel Satya Pekerti, 2021. "The Labor Market Impact Of Covid-19 And The Role Of E-Commerce Development: Evidence From Indonesia," Working Papers WP/10/2021, Bank Indonesia.

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    More about this item

    Keywords

    COVID-19; households; income; consumption; expectation;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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