Changes in Household and General Government Consumption and Savings During the COVID-19 Pandemic in the European Union (original) (raw)
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THE IMPACT OF THE COVID-19 PANDEMIC ON HOUSEHOLD INCOME, CONSUMPTION, AND SAVING
Corporate & Business Strategy Review, 2023
The primary factors that were initially assumed to contribute to a decline in household income were job losses, which affect the decrease in consumption (Organisation for Economic Cooperation and Development [OECD], 2020; Doerr & Gambacorta, 2020). Kosovo’s government has taken measures of social distancing, having a major impact on households such as the impact of dismissal due to the closure of businesses indefinitely. This regime is continuing from the different waves of COVID-19 variants and the family income as it goes and decreases. Therefore, the purpose of this study is to measure the impact of the COVID-19 pandemic on household income including household consumption and savings for the years 2020–2021. The study uses a quantitative research method, thus, for primary data collection, the online questionnaire is used. The latent variable in this paper is the COVID-19 pandemic, while the factors that determine the latent variable are: savings, job loss, family income before the pandemic, and consumption expenditures. The study concludes that COVID-19 has a negative and significant impact on family income, saving, job loss, and consumption expenditures. The results from the structural equation modeling (SEM) are significant and the likelihood ratio (LR) test is 47.46. These findings and those of Martin, Hallegatte, and Walsh (2020), Dossche, Kolndrekaj, and Slacalek (2021), and Bundervoet, Davalos, and Garcia (2021) are consistent.
Malaysian Journal of Consumer and Family Economics (MAJCAFE), 2023
Vilchynska, L., Shashyna, M., Saienko, V., & Starikov, O. (2023). The Impact of the COVID-19 Pandemic on Household Expenditures in the EU Countries (The Case of Central and Eastern Europe). Malaysian Journal of Consumer and Family Economics (MAJCAFE), Vol. 30, 155-175. DOI:10.60016/majcafe.v30.07 (Scopus) The COVID-19 pandemic has been one of the critical significant impact factors at the micro and microeconomic levels and has affected financial resources at both the state and household levels. The article aims to study the pandemic's impact on the dynamics and structure of household expenditures in Central and Eastern Europe. The research is based on statistical data analysis and trend analysis. Household performance indicators were studied in the period 2017-2021, with a focus on the period 2019-2021, when there was an increase in the incidence of COVID-19. The obtained results allow us to state that households in the countries of Central and Eastern Europe received less income due to the COVID-19 pandemic effect, significantly reduced their expenditures, and preferred savings over investment. Households reoriented their expenditures by reducing spending on recreation and culture, restaurants and hotels, clothing and footwear, transport, electricity, water, gas, housing, food, and non-alcoholic beverages. The share of education costs remained unchanged. In the near term, excluding additional risk factors and uncertainty in current prices, the costs of households in Central and Eastern European countries will decrease. Still, their specific weight in the structure of GDP will decline.
Analysis of Labor Flows and Consumption in Spain during COVID-19
SSRN Electronic Journal, 2022
This article analyzes the link between household consumption and its determinants during the pandemic in Spain. For this purpose, both quantitative and qualitative data on consumption included in the Consumer Survey Expectations (CES) carried out by the European Central Bank are used. First, we construct a consumption index on the basis of its qualitative data on spending trends during the pandemic, and its heterogeneity across population groups points towards both unsatisfied consumption (due to existing restrictions on consumption) and the deterioration in the labor market being drivers of the decline of consumption during the pandemic. Likewise, the results show that, in line with the less stringent measures in place to control the pandemic, the strong negative link between income levels and consumption developments (linked to forced savings) has moderated in 2021 (with data up to August) with respect to the previous year. Then, we estimate what proportion of the recovery in household expenditure during the third quarter of 2020, after the large decline observed in the first semester, can be explained by the observed changes in the distribution of hours worked. First, we combine information on hours, industry, gender and age in the Spanish Labor Force Survey (EPA) and consumption in the Spanish Survey on Household Finances (EFF) to estimate the potential change in expenditure associated with the change of hours worked for different population groups (age, gender, and education level). Those estimations also inform about the groups of the population whose expenditure has been most affected by the pandemic (low-schooling and individuals below 55 years of age). In a second step, we then compare potential and actual changes in consumption observed in the ECB's Consumer Expectation Survey to gauge quantitative contribution of changes in hours to the evolution of expenditure vs other factors (such as postponed expenditure). We find that changes in hours worked can explain almost half of consumption recovery in the 3rd quarter of 2020. Expected consumption trends are also analyzed. Results based on the analysis of qualitative data on expected consumption developments in the CES database indicate that in 2020 consumption perspectives were similar for households with different income levels, even if higher income families accumulated larger forced savings during this period. During 2021, once the phase of larger uncertainty about the economic and sanitary situation was overcome, higher income households also showed better consumption prospects. This suggests that savings accumulated during the pandemic may add greater momentum to the pickup in consumption once the uncertainty about the epidemiological and economic situation abates. Likewise, individuals that have suffered a recent decline in hours worked (and, particularly, those that have run into unemployment) seem to be also more pessimistic about their labor situation perspectives, affecting their consumption expectations. This suggests that that the consolidation of the recovery of the labor market observed recently is likely to have a key role in explaining future consumption developments.
2021
We analyse the effects of the Covid-19 crisis on the economic situation of 50+ Europeans. We construct a financial distress indicator that captures experiencing an income loss, difficulties to make ends meet and the need to postpone payments. We find that education and income before the pandemic have a protective role, and so does being past retirement age. For households under retirement age, instead, the pandemic has exacerbated inequalities. We also investigate whether households report worse difficulties in making ends meet compared to the pre-COVID period. We show that their ability to make ends meet worsens more with income losses during the pandemic compared to losses experienced in the two-year period before the pandemic.
Equilibrium
Research background: The outbreak of the COVID-19 pandemic, the reduction in income or the total loss of jobs have affected the financial behaviour of consumers worldwide. Managing the budget in times of turbulence and crisis has posed a challenge for households. Purpose of the article: The aim of the article is to determine to what extent the COVID-19 pandemic has affected the financial behaviour of the inhabitants of various countries and how Poland has stood out from the rest. Methods: Due to the orderly nature of the questions analysed, non-parametric tests were used in the analysis. The distribution of current expenditure in comparison with the period before the pandemic was analysed, as well as the results of comparative analyses with Mann-Whitney U tests for comparison of Poland with Austria, Belgium, the Czech Republic, France (974), Germany, Italy, Luxemburg, the Netherlands, Romania, Spain, Turkey, the United Kingdom, the USA. A study was carried out on the relationship b...
Fiscal policies and household consumption during the COVID-19 pandemic: A review of early evidence
SAFE White Paper Series, 2020
We review early evidence on how household consumption behavior has evolved over the pandemic and how different groups of households have responded to fiscal stimulus programs. Due to the scarcity of evidence for Europe, our review focuses on evidence from the US. Notwithstanding the institutional and demographic differences, we highlight generalizable findings and challenges to the design of stimulus policies from the pandemic. In conclusion, we identify several open issues for discussion.
21 How the first wave of the pandemic affected household finances
De Gruyter eBooks, 2023
How the first wave of the pandemic affected household finances Key points-During the first wave of the COVID-19 pandemic, individuals past retirement age were less likely than working-age individuals to be in financial distress, which suggests that the European public pension systems successfully protected older individuals.-Households who were experiencing difficulties before the pandemic were more likely to be in financial distress during the first wave of the pandemic, which highlights persistency of having difficulties making ends meet.-The ability to make ends meet of households who suffered income losses during the pandemic worsened more than the ability to make ends meet of households who suffered income losses in the two year-period before the pandemic.
Ekonomski anali
When coupled with strong external shocks such as COVID-19, the high levels of uncertainty that characterise fragile economies can have a strong impact on household consumption and saving behaviour. This paper analyses household consumption and saving behaviour in conjunction with COVID-19 in the context of a post-communist economy. Models and intervention analysis are used to identify the effect of catastrophic events such as the COVID-19 pandemic on two key macroeconomic measures for the Albanian economy. The findings show that the pandemic period caused a significant contraction of consumer spending and a significant increase in savings. Higher uncertainty appears to have been a key driver of such household behaviour. The effect on savings will endure in the long run, while retail trade is expected to recover. These findings call for a more astute use of fiscal and monetary policies to address the harmful emerging short-run effect of reduced household spending.
The Euro Area’s pandemic recession
2021
The COVID-19 pandemic led to a sharp contraction of economic activity in the euro area (and worldwide). Its anatomy differs strongly from other crises in recent history. We analyse the short-term economic effects of the COVID-19 shock through the lens of an estimated DSGE model. We augment the canonical DSGE set-up with ‘forced savings’ (lockdowns, social distancing), labour hoarding (short-time work) and liquidity-constrained firms to capture salient demand and supply effects of the COVID shock and the containment and stabilisation policies. Shock decompositions with the estimated model show the dominant role of ‘lockdown shocks’ (‘forced savings’, labour hoarding) in explaining the quarterly pattern of real GDP growth in 2020, complemented by a negative contribution from foreign and investment demand particularly in 2020q2 and a negative impact of persistently higher (precautionary) savings. The initial inflation response has been modest compared to the severity of the recession. ...