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Consumption recovery in 2021: an analysis drawing on consumer expectations

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  • Pablo Aguilar

Abstract

Consumers’ expectations of economic developments are a fundamental determinant of their spending decisions. This article estimates, using simple expectation formation rules in the context of a general equilibrium model, the degree of persistence that households assign to the economic impact of the pandemic. The findings show that households have perceived that the COVID-19 shock has a lower degree of persistence than other previous negative shocks. According to the model used, this would signal an uptick in private consumption, once the health crisis is over, that would tend to offset the decline observed during the pandemic.

Suggested Citation

  • Pablo Aguilar, 2021. "Consumption recovery in 2021: an analysis drawing on consumer expectations," Economic Bulletin, Banco de España, issue 3/2021.
    • Handle: RePEc:bde:journl:y:2021:i:09:d:aa:n:24
    Note: Analytical Articles
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    File URL: https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/InformesBoletinesRevistas/ArticulosAnaliticos/21/T3/Files/be2103-art24e.pdf
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    References listed on IDEAS

    as
    1. Bachmann, Rüdiger & Sims, Eric R., 2012. "Confidence and the transmission of government spending shocks," Journal of Monetary Economics, Elsevier, vol. 59(3), pages 235-249.
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    5. Aguilar, Pablo & Vázquez, Jesús, 2021. "An Estimated Dsge Model With Learning Based On Term Structure Information," Macroeconomic Dynamics, Cambridge University Press, vol. 25(7), pages 1635-1665, October.
    6. Vázquez, Jesús & Aguilar, Pablo, 2021. "Adaptive learning with term structure information," European Economic Review, Elsevier, vol. 134(C).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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