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Slow consumption recovery after the pandemic: perspective from a time preference approach

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  • Kei Hosoya

    (Kokugakuin University)

Abstract

The emergency phase of the COVID-19 pandemic ended in the spring of 2023, but the pace of economic recovery differs depending on the country. In particular, the recovery of consumption has varied widely, with many countries experiencing contraction or stagnation. This paper investigates the cause of this peculiar phenomenon as a serious impact on individual preferences and develops an analysis that serves as a first step toward clarifying and understanding the current macroeconomic situation by using an existing dynamic model with endogenous time preferences. Although we assume a case in which the long-run equilibrium is uniquely determined, it turns out that situations can arise where the path toward the equilibrium is indeterminate. An endogenously determined time preference rate, which depends on aggregate consumption and public health levels, is one source of such indeterminacy. We apply the various equilibrium converging paths introduced by such indeterminacy to the interpretation of the macroeconomic adjustment process during the recent COVID-19 pandemic.

Suggested Citation

  • Kei Hosoya, 2025. "Slow consumption recovery after the pandemic: perspective from a time preference approach," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 72(1), pages 1-25, June.
    • Handle: RePEc:spr:inrvec:v:72:y:2025:i:1:d:10.1007_s12232-025-00488-9
    DOI: 10.1007/s12232-025-00488-9
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    More about this item

    Keywords

    Endogenous time preference; Increasing marginal impatience; Indeterminacy of equilibrium path; Infectious disease pandemic;
    All these keywords.

    JEL classification:

    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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