Distributional Effects of COVID-19 on Spending: A First Look at the Evidence from Spain

• Authors: Marta Reynal-Querol and José García-Montalvo.
• BSE Working Paper: 1201 | September 20
• Keywords: liquidity , income , COVID-19 , spending , administrative data , high frequency
• JEL codes: E21, E62, E65, H31
• liquidity
• income
• COVID-19
• spending
• administrative data
• high frequency

We use data from a a large Spanish personal finance management fintech to have a first look at the heterogeneous effects of the COVID-19 on spending. We show a large reduction on spending since mid- March, coinciding with the shutdown of the economy and the strict confinement of population. Since the end of April the is a recovery of spending although, by the end of June, it is still 20% below the level of the previous year. Opposite to what has been observed in other countries, the recovery of spending is not more intense in low-income families than in their high-income counterparts. However, there is some evidence of differences in the intensity of rebound by age and account balance. This suggest differences in the intensity of government benefits for low-income families and financial difficulties for low-liquidity families.