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Macro and Micro Consumption Drivers in the Wake of the COVID-19 Pandemic

Author

Listed:
  • Elisa Guglielminetti

    (Bank of Italy)

  • Concetta Rondinelli

    (Bank of Italy)

Abstract

In this paper, we investigate the drivers of household consumption in the wake of the COVID-19 pandemic, focusing on Italy. We combine a macro and a micro approach and find that the deterioration in economic conditions can only explain about half of the slump in consumption, both at the aggregate and at the individual level; increased income and health risks significantly affect spending decisions, with heterogeneous impacts across expenditure categories and household types. At the micro level, the unemployed reduce spending for economic reasons, while the self-employed are mainly discouraged by health risks and uncertainty; restrictive measures play a minor role.

Suggested Citation

  • Elisa Guglielminetti & Concetta Rondinelli, 2024. "Macro and Micro Consumption Drivers in the Wake of the COVID-19 Pandemic," International Journal of Central Banking, International Journal of Central Banking, vol. 20(1), pages 181-237, February.
    • Handle: RePEc:ijc:ijcjou:y:2024:q:1:a:5
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    References listed on IDEAS

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    1. Dossche, Maarten & Zlatanos, Stylianos, 2020. "COVID-19 and the increase in household savings: precautionary or forced?," Economic Bulletin Boxes, European Central Bank, vol. 6.
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    3. Diane Alexander & Ezra Karger, 2023. "Do Stay-at-Home Orders Cause People to Stay at Home? Effects of Stay-at-Home Orders on Consumer Behavior," The Review of Economics and Statistics, MIT Press, vol. 105(4), pages 1017-1027, July.
    4. Lisa Rodano & Concetta Rondinelli, 2014. "The Italian Household Consumption: A Comparison Among Recessions," Politica economica, Società editrice il Mulino, issue 2-3, pages 203-234.
    5. Bachmann, Rüdiger & Born, Benjamin & Goldfayn-Frank, Olga & Kocharakov, Georgi & Luetticke, Ralph & Weber, Michael, 2021. "A Temporary VAT Cut as Unconventional Fiscal Policy," CEPR Discussion Papers 16690, C.E.P.R. Discussion Papers.
    6. Guerino Ardizzi & Andrea Nobili & Giorgia Rocco, 2020. "A game changer in payment habits: evidence from daily data during a pandemic," Questioni di Economia e Finanza (Occasional Papers) 591, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:

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    2. Erwan Gautier & Jérémi Montornès, 2025. "Measuring Households' Inflation Expectations in the Euro Area: The Effect of Panel Conditioning," Working papers 1007, Banque de France.

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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