The Impact of the Covid Pandemic Public Policies in Chile on Consumption

Using survey data, I simulate the counterfactual impact of the Chilean policies during the pandemic on household consumption. I find that aggregate consumption would have fallen by 16.7 percent in the absence of public transfers and a quarantine flexibilization policy. Consumption would still fall by 10.2 percent with a quarantine flexibilization policy but without public transfers. Overall, with a quarantine flexibilization and all the public transfers combined, household consumption was still 6.2 percent below its pre-pandemic period. Relative to a scenario with quarantine flexibilization but without income transfers, I find that the income, tax, monetary policy, expenses measures were the most progressive policies and increased total consumption by 2.2 percent, while the debt deferral and pension withdrawals increased consumption by 0.7 percent and 1.3 percent, respectively. The policies’ impact is highly heterogeneous, with 21.5 percent of the households increasing their individual consumption relative to its pre-pandemic level.