Can Stimulus Checks Boost an Economy under COVID-19? Evidence from South Korea

Moon Jung Kim () and Soohyung Lee ()
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Moon Jung Kim: Korea Institute of Public Finance (KIPF)
Soohyung Lee: Seoul National University

No 13567, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Various countries have implemented transfer programs to individuals since the Covid-19 outbreaks. However, the extent to which such transfers alleviate economic recessions is unclear. This paper analyzes a South Korean program, which provided vouchers redeemable only at small local businesses. We find that, due to the program, over 30% of households across all income groups increased their food and overall household spending, but the usage restriction may have affected consumer choice, distorting business competition. While the employment and sales of small businesses improved, the program's fiscal sustainability is in question because of the large tax exemption.

Keywords: universal transfers; stimulus payment; COVID-19; consumption; distortion (search for similar items in EconPapers)
JEL-codes: D3 D6 H2 H6 L1 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2020-08
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (8)

Published - published in: International Economic Journal, 2021, 35 (1), 1 - 12

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