The Impact of Coronavirus Pandemic on Private and Public Consumption Expenditure

Raouf, Engy

doi:10.21608/erurj.2024.259625.1105

The Impact of Coronavirus Pandemic on Private and Public Consumption Expenditure

Document Type : Original Article

Author

Engy Raouf

Faculty of Management, Economics and Business Technology, Egyptian Russian University Badr City, Cairo-Suez Road, 11829, Cairo, Egypt./ Economics Department, Faculty of Commerce and Business Administration, Helwan University Cairo, Egypt.

10.21608/erurj.2024.259625.1105

Abstract

The current worldwide coronavirus pandemic has caused the most economic instability since the Second World War. Lockdown and social distance essentially lead to losses in manufacturing, supply, trade, investment, and employment. Spending by governments and the private sector will be affected by the pandemic. As consumers will react to the crisis by shifting demand to specific products and online orders. At the same time, governments have to intervene to overcome the negative impact of COVID-19 on the economy using different policy tools. Government expenditure can be used as a tool to control the spread of the pandemic. This paper explores the impact of the coronavirus pandemic on spending whether by the private or public sectors, by employing a random effect panel regression analysis and GMM model using quarterly data over the period from 2019 to 2021 for 37 OECD countries. The results indicate that the pandemic, indexed by WUPI, has a positive and significant impact on government expenditure and a negative impact on private sector consumption spending.

Keywords