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© 2023 International Monetary Fund
WP/23/81
IMF Working Paper
European Department
Far More Than a Shot in the Arm: Vaccines and Consumer Spending
Prepared by Serhan Cevik1
Authorized for distribution by Bernardin Akitoby
April 2023
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Abstract
The spread of the COVID-19 pandemic and government interventions have reshaped economic activity with abrupt changes in household consumption behavior across the world. This paper provides an empirical investigation of how the COVID-19 vaccine rollout has affected consumer spending at daily frequency using debit and credit card transactions in three European countries. Empirical results show that COVID-19 vaccinations, along with other policy interventions, have mitigated the severe negative impact of the pandemic and boosted consumer spending. First, the vaccination deployment has a statistically and economically significant positive effect on private consumption. Second, other policy responses to the pandemic—designed to contain the spread of the virus and provide support to businesses and households—have significant effects on the amount and composition of debit and credit card transactions. Third, the impact of COVID-19 vaccinations in terms of stimulating consumer spending appears to be more pronounced on contact-intensive sectors such as services than goods.
| JEL Classification Numbers: | D12; D43; D81; D84; E21; E27; E32; E52; I10; L11; Q54 |
| Keywords: | Pandemic; COVID-19; vaccination; household behavior; consumer spending; card transactions; Baltics; Estonia; Latvia; Lithuania |
| Author’s E-Mail Address: | scevik@imf.org |
| JEL Classification Numbers: | D12; D43; D81; D84; E21; E27; E32; E52; I10; L11; Q54 |
| Keywords: | Pandemic; COVID-19; vaccination; household behavior; consumer spending; card transactions; Baltics; Estonia; Latvia; Lithuania |
| Author’s E-Mail Address: | scevik@imf.org |
The authors would like to thank Carlo Pizzinelli for insightful comments and suggestions, and Swedbank for making the principal dataset available for research.