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Consumer Panic in the COVID-19 Pandemic

Author

Listed:
  • Michael Keane

    (School of Economics, UNSW Business School, UNSW Sydney)

  • Timothy Neal

    (UNSW School of Economics)

Abstract

We develop an econometric model of consumer panic (or panic buying) during the COVID-19 pandemic. Using Google search data on relevant keywords, we construct a daily index of consumer panic for 54 countries from January to late April 2020. We also assemble data on government policy announcements and daily COVID19 cases for all countries. Our panic index reveals widespread consumer panic in most countries, primarily during March, but with significant variation in the timing and severity of panic between countries. Our model implies that both domestic and world virus transmission contribute significantly to consumer panic. But government policy is also important: Internal movement restrictions - whether announced by domestic or foreign governments - generate substantial short run panic that largely vanishes in a week to ten days. Internal movement restrictions announced early in the pandemic generated more panic than those announced later. In contrast, travel restrictions and stimulus announcements had little impact on consumer panic.

Suggested Citation

  • Michael Keane & Timothy Neal, 2020. "Consumer Panic in the COVID-19 Pandemic," Discussion Papers 2020-06, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2020-06
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2020-06.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Coronavirus; Hoarding; Consumption; Panel Data; Containment Policy;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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