Emergency Loans and Consumption – Evidence from COVID-19 in Iran
Covid Economics 45, 28 August 2020: 111-146
36 Pages Posted: 1 Sep 2020
Date Written: August 31, 2020
We use monthly and daily transaction data from Iran, disaggregated by provinces, good and service categories, and retail store segments to gauge the impact of government emergency loans on consumption patterns. We find that emergency loans are positively related with higher consumption of non-durable and semi-durable goods, suggesting that the emergency loans were predominantly used for their intended purpose. The effects were strongest in the first few days and then dissipated over time. We find effects only for in-store but not online transactions and in poorer rather than richer provinces, suggesting that it is the poorer who reacted more strongly with higher consumption to the emergency loans.
Keywords: COVID-19, household consumption, government support
JEL Classification: G3, I18, O16
Suggested Citation: Suggested Citation