 Can stimulus checks to households save the local economy? The impact of South Korea’s COVID-19 stimulus on small business salesJihee Kim and Susang Lee Economic Analysis and Policy, 2024, vol. 84, issue C, 159-176 Abstract: During economic downturns, stimulus checks are often used to help households but may fail to reach the most affected sectors, such as local small businesses during COVID-19. Although the aggregate impact of these measures is well-studied, their distributional effects on local economies are less explored. Using a difference-in-differences analysis, this study examines weekly local sales data during 2020 from Gyeonggi and Incheon, South Korea, to assess the impact of Gyeonggi’s stimulus, distributed to every household for spending exclusively at local stores, contrasting with Incheon’s lack of such stimulus. We find that Gyeonggi’s stimulus initially boosted local sales by 4.5%, though this impact gradually diminished. This translates into a local-sales multiplier of 1.09, indicating that more than distributed stimulus was spent due to spillover and propagation effects in local in-person spending. Our findings emphasize the importance of tailored fiscal policy designs and assessing the distributional impacts of fiscal measures. Keywords: COVID-19; Stimulus payments; Local small businesses (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:84:y:2024:i:c:p:159-176 DOI: 10.1016/j.eap.2024.08.017 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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