The effects of fiscal policy on households during the COVID-19 pandemic: Evidence from Thailand and Vietnam

Dzung Bui; Lena Dräger; Bernd Hayo; Giang Nghiem

doi:10.1016/j.worlddev.2022.105828

The effects of fiscal policy on households during the COVID-19 pandemic: Evidence from Thailand and Vietnam

World Dev. 2022 May:153:105828. doi: 10.1016/j.worlddev.2022.105828. Epub 2022 Feb 11.

Authors

Dzung Bui¹, Lena Dräger², Bernd Hayo¹, Giang Nghiem²

Affiliations

¹ University of Marburg, Germany.
² Leibniz University of Hannover, Germany.

Abstract

The economic crisis created by the COVID-19 pandemic induced many governments to provide financial assistance to households. Using representative consumer surveys conducted during the pandemic in 2020, we examine the effects of this fiscal policy instrument on households in two emerging economies, Thailand and Vietnam. Our paper contributes to the literature by studying how consumer sentiment and durable spending relate to receiving government financial support and the underlying transmission channels for these responses. We find that financial support to households is related to more positive consumer sentiment and increases in actual and planned durable spending, while also being correlated with a more optimistic macroeconomic outlook, higher trust in the government, and higher personal well-being.

Keywords: COVID-19; Consumer sentiment; D12; D83; Durables spending; E62; E71; Financial support of households; Fiscal policy; Government trust; H31; Macroeconomic expectations; Thailand; Vietnam.