Household spending and fiscal support during the COVID-19 pandemic: Insights from a new consumer survey.

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Date: July 2022
Publisher: Elsevier B.V.
Document Type: Article
Length: 512 words

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Abstract :

Keywords Consumer Expectations Survey; Fiscal Policy; COVID-19; Household perceptions Highlights * The Consumer Expectations Survey, a new high-frequency panel of euro area consumers is introduced. * Improving consumers perception about the adequacy of fiscal interventions incentivises household spending. * This perception channel also operates for households that did not themselves receive any support. Abstract This paper introduces the Consumer Expectations Survey (CES), a new online, high frequency panel survey of euro area consumers' expectations and behaviour. The paper also investigates whether public perceptions about fiscal support measures introduced during the pandemic have influenced spending behaviour. We show that simple and factual information treatments about government support policies that are communicated to random subsets of respondents can help improve consumers' perceptions about the adequacy of fiscal interventions relative to that of an untreated control group. We find evidence that this improvement in beliefs has a causal effect on consumer spending, in particular raising spending on large items like holidays and cars. Moreover, we show that such beliefs influence household expectations about own income prospects, future access to credit and financial sentiment, while they do not affect expectations about future taxes, implying no evidence of Ricardian effects in household behaviour. We find that perceptions affect spending also amongst households that did not receive any government support, suggesting that fiscal interventions can have broader consequences as they influence the behaviour of groups beyond the targeted ones. Author Affiliation: Directorate General Research, European Central Bank, 60640 Frankfurt am Main, Germany * Corresponding author. Article History: Received 1 December 2021; Revised 22 February 2022; Accepted 23 February 2022 (footnote)[white star] We would like to thank the Editor, an anonymous referee as well as many colleagues and collaborators who have supported the development of the CES from the outset. We are particularly grateful to Olivier Armantier, Wandi Bruine de Bruin, Dimitris Christelis, Oli Coibion, Vitor Constancio, Jeff Dominitz, Michael Ehrmann, Ioannis Ganoulis, Yuriy Gorodnichenko, Charles Hagon, Tullio Jappelli, Neale Kennedy, Luc Laeven, Philip Lane, Annamaria Lusardi, Chuck Manski, Spyridon Panagopoulos, Maarten van Rooij, Frank Smets, Isabel Schnabel, Henrik Schwartzlose, Wilbert van der Klaauw and Caroline Willeke for their support and many useful discussions during the early design phase of the CES project. At the ECB, the CES development would not have been possible without the strong commitment of the CES project team and research assistance from Justus Meyer and Athanasios Tsiortas as well as the very close collaboration with the team of survey research experts at Ipsos Public Affairs - the firm appointed to take charge of the survey implementation and advise the ECB project team on the CES development and design. In addition, the development of the CES has been supported through close collaboration with staff from the National Central Banks from the European System of Central Banks (ESCB) through frequent meetings of the ESCB Internet Survey Contact Group. The opinions expressed in this paper are those of the authors and do not necessarily reflect the views of the ECB. Any errors are the sole responsibility of the authors. Byline: Dimitris Georgarakos [dimitris.georgarakos@ecb.europa.eu] (*), Geoff Kenny [geoff.kenny@ecb.europa.eu]

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Gale Document Number: GALE|A708650506