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True Impact of Japan's Covid State of Emergency on Consumption

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  • Naoki Tani

    (Institute of Economic Research, Kyoto University)

Abstract

This study examines the effect of the Covid pandemic containment measures on Japan's consumption, using high-frequency credit card data. Based on the assumption that neighboring municipalities on prefectural borders with different containment policies have an equivalent fear of contagion, this study distinguishes the negative effect of containment measures on consumption from the effect of fear, by employing a synthetic control method. Specifically, it constructs a synthetic control municipality that faces fear equal to that faced by untreated municipalities in the donor pool, and whose post-treatment consumption corresponds to the counterfactual consumption of the treated municipality without containment intervention. Comparing the synthetic control and treated municipalities' consumption with prefectural borders, allows the identification of the true impact of the containment policies on consumption. These results indicate that, the negative effects of the state of emergency on consumption is much lower than the extreme decline in consumers' spending.

Suggested Citation

  • Naoki Tani, 2023. "True Impact of Japan's Covid State of Emergency on Consumption," KIER Working Papers 1092, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1092
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    References listed on IDEAS

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    More about this item

    Keywords

    Covid; Pandemic; Stay-at-home order; State of emergency; Consumer activity; Fear of infection; Credit card data;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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