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Micro-Evidence on the Consumption Impact of Income-Support Policies During COVID-19

Author

Listed:
  • Hadzi-Vaskov, Metodij
  • Luttini, Emiliano
  • Ricci, Luca Antonio

Abstract

Income-support policies can boost consumption during a catastrophic episode like the COVID-19 pandemic. Using data on Chilean municipalities, we investigate the impact on private consumption of income-support policies, such as lump-sum transfers and withdrawals of funds from the contributors’ mandatory pension accounts. We find that both emergency income and pension withdrawals had statistically significant effects with an estimated average marginal propensity to consume of about 20 percent. Consumption of durable goods is more sensitive to these policies than other goods, especially in the programs’ initial stages. Higher educational attainment and financial leverage, proxying better access to bank credit, are associated with weaker consumption reaction across municipalities.

Suggested Citation

  • Hadzi-Vaskov, Metodij & Luttini, Emiliano & Ricci, Luca Antonio, 2025. "Micro-Evidence on the Consumption Impact of Income-Support Policies During COVID-19," CEPR Discussion Papers 20176, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20176
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    File URL: https://cepr.org/publications/DP20176
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    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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