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Modeling the consumption response to the CARES Act

Christopher Carroll, Jiri Slacalek (), Matthew White () and Edmund Crawley ()

No 2441, Working Paper Series from European Central Bank

Abstract: To predict the effects of the 2020 U.S. ‘CARES’ act on consumption, we extend a model that matches responses of households to past consumption stimulus packages. The extension allows us to account for two novel features of the coronavirus crisis. First, during the lockdown, many types of spending are undesirable or impossible. Second, some of the jobs that disappear during the lockdown will not reappear when it is lifted. We estimate that, if the lockdown is short-lived, the combination of expanded unemployment insurance benefits and stimulus payments should be sufficient to allow a swift recovery in consumer spending to its pre-crisis levels. If the lockdown lasts longer, an extension of enhanced unemployment benefits will likely be necessary if consumption spending is to recover. JEL Classification: D83, D84, E21, E32

Keywords: consumption; coronavirus; stimulus (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-mac
Note: 1111765
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

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Related works:
Journal Article: Modeling the Consumption Response to the CARES Act (2021) Downloads
Working Paper: Modeling the Consumption Response to the CARES Act (2020) Downloads
Working Paper: Modeling the Consumption Response to the CARES Act (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20202441

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