Year: 2020
Type: article
Study design: Observational Study
Abstract: Prospective economic developments depend on the behavior of consumer spending. A key question is whether private expenditures recover once social distancing restrictions are lifted or whether the COVID-19 crisis has a sustained impact on consumer confidence, preferences, and, hence, spending. Changes in consumer behavior may not be temporary, as they may reflect long-term changes in attitudes arising from the COVID-19 experience. This paper uses data from a representative consumer survey in five European countries conducted in summer 2020, after the release of the first wave’s lockdown restrictions. We document the underlying reasons for households’ reduction in consumption in five key sectors: tourism, hospitality, services, retail, and public transports. We identify a large confidence shock in the Southern European countries and a permanent shift in consumer preferences in the Northern European countries. Our results suggest that horizontal fiscal support to all firms risks creating zombie firms and would hinder necessary structural changes to the economy.
Authors: Hodbod, A., Hommes, C., Huber, S.J., Salle, I.L.; id_orcid 0000-0002-3258-1060
Institutions: Tinbergen Institute, University of Amsterdam, Bank of Canada
Language: English
Topic: COVID-19 Pandemic Impacts
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7038649540