Habits and Demand Changes after COVID-19

29 Pages Posted: 15 Jul 2021

See all articles by Mauro Bambi

Mauro Bambi

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Daria Ghilli

Luiss Guido Carli University - Department of Economics and Finance

Fausto Gozzi

Luiss

Marta Leocata

Luiss Guido Carli University - Department of Economics and Finance

Date Written: June 30, 2021

Abstract

In this paper, we investigate how the COVID-19 pandemics and more precisely the lockdown of a sector of the economy may have changed our habits and, therefore, altered the demand of some goods even after the re-opening. In a two-sector infinite horizon economy, we show that the demand of the goods produced by the sector closed during the lockdown could shrink or expand with respect to their prepandemic level depending on the length of the lockdown and the relative strength of the satiation effect and the substitutability effect. We also provide conditions under which this sector could remain inactive even after the lockdown as well as an insight on the policy which should be adopted to avoid this outcome.

Keywords: Lockdown, Habits, 2-Sector Infinite Horizon Economy

JEL Classification: E21, E30, E60, I18

Suggested Citation

Bambi, Mauro and Ghilli, Daria and Gozzi, Fausto and Leocata, Marta, Habits and Demand Changes after COVID-19 (June 30, 2021). Available at SSRN: https://ssrn.com/abstract=3877261 or http://dx.doi.org/10.2139/ssrn.3877261

Mauro Bambi

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

Daria Ghilli (Contact Author)

Luiss Guido Carli University - Department of Economics and Finance ( email )

Viale di Villa Massimo, 57
Rome, 00161
Italy

Fausto Gozzi

Luiss ( email )

Viale di Villa Massimo, 57
Rome, 00161
Italy

HOME PAGE: http://www.luiss.it/docenti/curricula/index.php?cod=Z08

Marta Leocata

Luiss Guido Carli University - Department of Economics and Finance ( email )

Viale di Villa Massimo, 57
Rome, 00161
Italy

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