The Impact of the Covid Pandemic Public Policies in Chile on Consumption

Abstract

Using survey data, I simulate the counterfactual impact of the Chilean policies during the pandemic on household consumption. I (cid:133)nd that aggregate consumption would have fallen by 16.7% in the absence of public transfers and a quarantine (cid:135)exibilization policy. Consumption would still fall by 10.2% with a quarantine (cid:135)exibilization policy but without public transfers. Overall, with a quarantine (cid:135)exibilization and all the public transfers combined, household consumption was still 6.2% below its pre-pandemic period. Relative to a scenario with quarantine (cid:135)exibilization but without income transfers, I (cid:133)nd that the income, tax, monetary policy, expenses measures were the most progressive policies and increased total consumption by 2.2%, while the debt deferral and pension withdrawals increased consumption by 0.7% and 1.3%, respectively. The policies(cid:146)impact is highly heterogeneous, with 21.5% of the households increasing their individual consumption relative to its pre-pandemic level.