| By: |
Dzung Bui (University of Marburg);
Lena Dräger (Leibniz University of Hannover);
Bernd Hayo (University of Marburg);
Giang Nghiem (Leibniz University of Hannover) |
| Abstract: |
In response to the economic crisis created by the COVID-19 pandemic, many
governments provided 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,
Vietnam and Thailand. Our paper contributes to the literature by studying
consumer sentiment and durable spending responses to government financial
support and the underlying transmission channels for these responses. We find
that government support improves consumer sentiment and increases the
likelihood of durable spending. Possible channels for these effects include
more optimistic macroeconomic expectations and higher trust in the
government's ability to deal with the pandemic, as well as less concern about
the general impact of the crisis. We also find that financial support improves
individuals' mental health and life satisfaction. Our results suggest that
government financial support not only helps stimulate the economy but also
enhances people's well-being more generally. |
| Keywords: |
Fiscal policy, Financial support of households, Consumer sentiment, Durables spending, Expectations, Government trust, COVID-19, Thailand, Vietnam |
| JEL: |
E62 E71 D12 D83 H31 |
| Date: |
2021 |
| URL: |
http://d.repec.org/n?u=RePEc:imk:wpaper:211-2021&r= |