Governments' economic support for households during the COVID-19 pandemic and consumer confidence

Hassan F Gholipour; Reza Tajaddini; Mohammad Reza Farzanegan

doi:10.1007/s00181-023-02367-0

Governments' economic support for households during the COVID-19 pandemic and consumer confidence

Empir Econ. 2023 Feb 1:1-20. doi: 10.1007/s00181-023-02367-0. Online ahead of print.

Authors

Hassan F Gholipour¹, Reza Tajaddini², Mohammad Reza Farzanegan^{3

4

5}

Affiliations

¹ School of Business, Western Sydney University, Sydney, Australia.
² School of Business, Law, and Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.
³ Economics of the Middle East Research Group, Center for Near and Middle Eastern Studies (CNMS), School of Business and Economics, Philipps-Universität Marburg, Marburg, Germany.
⁴ CESifo, Munich, Germany.
⁵ ERF, Cairo, Egypt.

Abstract

To combat the adverse consequences of the COVID-19 pandemic, governments have implemented various economic policies. This study examines how different types of government economic support for households are associated with consumer confidence. Utilizing data from 35 countries in the Organization for Economic Co-operation and Development for January 2020-October 2021 and applying panel fixed effect and system generalized methods of moments regressions, we show that higher levels of government economic support lead to higher levels of consumer confidence. The results also suggest that government income support for households has a stronger impact than debt/contract relief on consumer confidence during the pandemic in the full sample. Moreover, we find that debt/contract relief is a more effective policy to boost confidence in emerging economies. Finally, COVID-19 fatalities have a significant negative effect on consumer confidence.

Keywords: COVID-19 pandemic; Consumer confidence; Debt relief; Economic support; Income support; OECD; System GMM.