How has the COVID-19 crisis affected different households’ consumption in the euro area?

Dimitris Christelis, Dimitris Georgarakos, Tullio Jappelli () and Geoff Kenny

Research Bulletin, 2021, vol. 84

Abstract: The coronavirus (COVID-19) pandemic has generated a complex economic shock that has affected households across the euro area very differently. In studying the impact of this shock on household consumption and the implications for the economic outlook it is critical to understand and factor in these large divergences. In this article, we use rich data from the Consumer Expectations Survey, a new ECB household survey that interviews around 10,000 households across the six largest euro area economies on a monthly basis. We document substantial divergences in pandemic-induced financial concerns of households across population subgroups and countries, with financial concerns being significantly higher for younger, female, and low-income individuals in countries where the first wave of COVID-19 was more severe. Also, we show how these concerns can account to a large extent for the drop in aggregate household spending in 2020. Reflecting this heterogeneity, our results imply that fiscal measures will be most effective in stabilising aggregate consumption and supporting economic recovery if they target the most vulnerable groups with the greatest financial concerns. JEL Classification: D12, D81, E21, G51, H31

Keywords: Consumption; Covid-19; Financial concerns; Fiscal policies (search for similar items in EconPapers)
Date: 2021-05
Note: 483508
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Citations: View citations in EconPapers (2)

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