Consumption recovery in 2021: an analysis drawing on consumer expectations

Pablo Aguilar

Economic Bulletin, 2021, issue 3/2021, No 24

Abstract: Consumers’ expectations of economic developments are a fundamental determinant of their spending decisions. This article estimates, using simple expectation formation rules in the context of a general equilibrium model, the degree of persistence that households assign to the economic impact of the pandemic. The findings show that households have perceived that the COVID-19 shock has a lower degree of persistence than other previous negative shocks. According to the model used, this would signal an uptick in private consumption, once the health crisis is over, that would tend to offset the decline observed during the pandemic.

Keywords: expectations; consumption; learning. (search for similar items in EconPapers)
JEL-codes: C53 D84 E30 E44 (search for similar items in EconPapers)
Date: 2021
Note: Analytical Articles
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