Household spending and fiscal support during the COVID-19 pandemic: Insights from a new consumer survey

Georgarakos, D. and Kenny, G. (2022) Household spending and fiscal support during the COVID-19 pandemic: Insights from a new consumer survey. Journal of Monetary Economics, 129, S1-S14. (doi: 10.1016/j.jmoneco.2022.02.007) (PMID:35233129) (PMCID:PMC8876095)

Abstract

This paper introduces the Consumer Expectations Survey (CES), a new online, high frequency panel survey of euro area consumers’ expectations and behaviour. The paper also investigates whether public perceptions about fiscal support measures introduced during the pandemic have influenced spending behaviour. We show that simple and factual information treatments about government support policies that are communicated to random subsets of respondents can help improve consumers’ perceptions about the adequacy of fiscal interventions relative to that of an untreated control group. We find evidence that this improvement in beliefs has a causal effect on consumer spending, in particular raising spending on large items like holidays and cars. Moreover, we show that such beliefs influence household expectations about own income prospects, future access to credit and financial sentiment, while they do not affect expectations about future taxes, implying no evidence of Ricardian effects in household behaviour. We find that perceptions affect spending also amongst households that did not receive any government support, suggesting that fiscal interventions can have broader consequences as they influence the behaviour of groups beyond the targeted ones.

• Item Type: Articles
• Keywords: Consumer expectations survey, fiscal policy, COVID-19, household perceptions.
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Georgarakos, Professor Dimitris
• Authors: Georgarakos, D., and Kenny, G.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Journal of Monetary Economics
• Publisher: Elsevier
• ISSN: 0304-3932
• ISSN (Online): 1873-1295
• Published Online: 25 February 2022
• Copyright Holders: Copyright © 2022 Elsevier B.V.
• First Published: First published in Journal of Monetary Economics 129: S1-S14
• Publisher Policy: Reproduced in accordance with the publisher copyright policy