Impact of COVID-19 Pandemic on Consumer Economy: Countermeasures Analysis

The COVID-19 pandemic will change China’s macroeconomic environment in terms of total demand and total supply in the next one to two quarters. The article compares the economic environment at present and that of severe acute respiratory syndrome (SARS) to define the potential influence of the new coronavirus (COVID-19). The potential impact on the macroeconomy includes the slower growth of consumption and investment, fluctuation of prices, and the contraction of export and import. The policy environment will also change in terms of monetary and fiscal policy, which will affect firms’ financing and tax paying. The impact on the consumer economy will be large. First, three modes of the influence on different types of retail industries include moderate, positive, and negative. The epidemic accelerates the revolution of business patterns in China, since the no-man delivery, sinking market, and indoors economy have emerged as the new powers in changing the business models. In general, although the impact of the epidemic on consumption seems comparatively the largest, the “compensatory consumption” can alleviate it to some extent.

SHOCKS AND FRICTIONS IN THAI ECONOMY: THROUGH THE LENS OF BUSINESS CYCLE ACCOUNTING

This paper applies business cycle accounting methodology to analyze the sources of aggregate fluctuations in Thai economy, especially during the recent severe recessions in 1997–1998 and 2008–2009. This exploration helps researchers uncover possible shocks and frictions that drive business cycle in a small and open economy within a minimal model set-up. Under this methodology, a fluctuation in aggregate output can be accounted for by exogenous time-varying wedges, namely efficiency wedge, investment wedge, labor wedge, government wedge, etc. This study found that the efficiency wedge is essential in accounting for aggregate output, consumption and investment fluctuation, while the bond wedge, which only present in an open economy setting, is a prime factor in accounting for movement in current accounts. I conducted counterfactual experiments to see what accounts for the output drop during recent recessions. I find that the efficiency wedge played a key role in recent recessions in Thailand, while the investment wedge was accounted for slow economic recovery after the recessions.