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The COVID-19 Consumption Game-Changer: Evidence from a Large-Scale Multi-Country Survey

Alexander Hodbod, Cars Hommes (), Stefanie Huber and Isabelle Salle ()

Staff Working Papers from Bank of Canada

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 had a sustained impact on consumer confidence, preferences, and hence, spending. The elongated and profound experience of the COVID-19 crisis may durably affect consumer preferences. We conducted a representative consumer survey in five European countries 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 shift in consumer preferences in the Northern European countries, particularly among high-income earners. We conclude that the COVID-19 experience has altered consumer behavior and that long-term sectoral consumption shifts may occur.

Keywords: Coronavirus disease (COVID-19); Domestic demand and components; Firm dynamics; Fiscal policy; Recent economic and financial developments (search for similar items in EconPapers)
JEL-codes: D12 D81 D84 E21 E60 E71 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2021-11
New Economics Papers: this item is included in nep-eec and nep-mac
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Journal Article: The COVID-19 consumption game-changer: Evidence from a large-scale multi-country survey (2021) Downloads
Working Paper: The COVID-19 consumption game-changer: evidence from a large-scale multi-country survey (2021) Downloads
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