The Macroeconomic Consequences of Stimulating Offline Consumption during COVID-19

Dawis Kim, Minseung Kim, Myungkyu Shim

Research output: Contribution to journalArticlepeer-review

Abstract

This paper analyses the macroeconomic consequences of a fiscal policy implemented in South Korea during COVID-19, ‘Korean Economic Impact Payment (KEIP)’ program, that aims to stimulate offline consumption. In doing so, we modify a SIR-macro model by explicitly distinguishing online- and offline consumption goods. Benchmark analysis predicts that (1) there are positive effects on key macro variables at the impact while progress of the epidemic hardly changes and (2) the transfer multiplier from the KEIP is estimated to be about 0.5 at the impact, a value with what we expect from the usual neo-classical business cycle model.

Original languageEnglish
Pages (from-to)20-42
Number of pages23
JournalGlobal Economic Review
Volume50
Issue number1
DOIs
Publication statusPublished - 2021

Bibliographical note

Funding Information:
Shim acknowledges the financial support from Yonsei University (Yonsei University Future-leading Research Initiative of 2020 (2020-22-0088)). The authors thank the anonymous referees for helpful suggestions and comments. Shim acknowledges the financial support from Yonsei University (Yonsei University Future-leading Research Initiative of 2020 (2020-22-0088)). Hye Rim Yi provided excellent research assistance.

Publisher Copyright:
© 2021 Institute of East and West Studies, Yonsei University, Seoul.

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Political Science and International Relations

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