Consumption responses to COVID-19 payments: Evidence from a natural experiment and bank account data

So Kubota*, Koichiro Onishi, Yuta Toyama

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)


We document households’ spending responses to a stimulus payment in Japan during the COVID-19 pandemic. In response to the pandemic, the Japanese government launched a universal cash entitlement program offering a sizable lump sum of money to all residents to alleviate the financial burden of the pandemic on households. The timings of cash deposits varied substantially across households due to unexpected delays in administrative procedures. Using a unique panel of 2.8 million bank accounts, we find an immediate jump in spending during the week of payments, followed by moderately elevated levels of spending that persist for more than one month after payments are received. We also document sizable heterogeneity in consumption responses by recipients’ financial status and demographic characteristics. In particular, demand deposit balances play a more crucial role than other financial asset holdings, suggesting the importance of the wealthy hand-to-mouth.

Original languageEnglish
Pages (from-to)1-17
Number of pages17
JournalJournal of Economic Behavior and Organization
Publication statusPublished - 2021 Aug


  • Bank
  • COVID-19
  • Consumption
  • Japan
  • Marginal propensity to consume
  • Natural experiment
  • Stimulus

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management


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