Working Paper: CEPR ID: DP14809
Authors: Asger Lau Andersen; Emil Toft Hansen; Niels Johannesen; Adam Sheridan
Abstract: This paper uses transaction-level customer data from the largest bank in Denmark to estimate the change in consumer spending caused by the COVID-19 pandemic and the resulting shutdown of the Danish economy. We find that aggregate spending was on average 27% below the counterfactual level without the pandemic in the seven weeks following the shutdown. The spending drop was mostly concentrated on goods and services whose supply was directly restricted by the shutdown, suggesting a limited role for spillovers to non-restricted sectors through demand in the short term. The spending drop was larger for individuals with more ex ante exposure to the adverse consequences of the crisis in the form of job loss, wealth destruction, severe disease and disrupted consumption patterns and, most notably, for individuals with an ex post realization of crisis-related unemployment.
Keywords: COVID-19; Consumer Spending; Pandemic; Social Distancing; Shutdown
JEL Codes: D12; H31; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| perceived health risks (I12) | consumer behavior (D19) |
| COVID-19 pandemic (H12) | aggregate consumer spending (E20) |
| shutdown (J65) | aggregate consumer spending (E20) |
| shutdown (J65) | spending in restricted sectors (H76) |
| shutdown (J65) | spending in open sectors (H59) |
| ex ante exposure to crisis-related risks (F65) | spending reduction (H61) |