A THE IMPACT OF COVID-19 LOCKDOWNS ON HOUSEHOLD INCOME, CONSUMPTION, AND EXPECTATION: EVIDENCE FROM HIGH

Masagus M Ridhwan, Jahen Rezki, Asep Suryahadi and Arief Ramayandi

No WP/07/2021, Working Papers from Bank Indonesia

Abstract: We investigate the causal impact of COVID-19, through lockdowns, on household income, consumption, and expectations in Indonesia, using high frequency data from the monthly Bank Indonesia consumer survey with more than 176,000 respondents. We find that COVID-19 lockdown has a large and significant negative impact on households’ income and consumption. Moreover, COVID-19 lockdown also negatively affects expected income. This study also finds that households try to smooth consumption in the face of declining income, resulting in a significant increase in the budget allocation for consumption while reducing the shares of debt installments and savings. The impact of lockdown on households is also heterogeneous by expenditure levels, regions, and level of education. These findings have important policy implications to cushion the pandemic’s impact on vulnerable households and ensure a more inclusive recovery.

Keywords: COVID-19; households; income; consumption; expectation (search for similar items in EconPapers)
JEL-codes: C83 D14 D84 E21 E22 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2021
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (1)

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