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1/5
In Spain, as in much of the rest of the world, the dis-saving of those left unemployed by Covid-19 was more than matched by increased savings among those who continued to have income. This means that unemployed people reduced their consumption... https://elpais.com/economia/2020-11-23/el-dinero-durmiente-de-la-crisis-tengo-mas-ahorros-que-nunca.html?ssm=TW_CC
In Spain, as in much of the rest of the world, the dis-saving of those left unemployed by Covid-19 was more than matched by increased savings among those who continued to have income. This means that unemployed people reduced their consumption... https://elpais.com/economia/2020-11-23/el-dinero-durmiente-de-la-crisis-tengo-mas-ahorros-que-nunca.html?ssm=TW_CC
2/5
because they have no money and the employed did the same because they're worried about the future. Add in the impact on business investment (businesses expecting lower consumption will cut back on investment), and the demand-side impact on the economy is pretty brutal.
because they have no money and the employed did the same because they're worried about the future. Add in the impact on business investment (businesses expecting lower consumption will cut back on investment), and the demand-side impact on the economy is pretty brutal.
3/5
If households draw down some of their excess savings next year, however, we could see stronger-than-expected recoveries in every country, but to the extent that part of the increase in savings is a permanent reaction to a more uncertain and hostile world, this will act as...
If households draw down some of their excess savings next year, however, we could see stronger-than-expected recoveries in every country, but to the extent that part of the increase in savings is a permanent reaction to a more uncertain and hostile world, this will act as...
4/5
a permanent reduction in demand for the economy, and so means slower growth and more unemployment or debt.
Of course, it also means that governments can counter this effect by increasing spending – providing more income to the unemployed, for example – with no fear...
a permanent reduction in demand for the economy, and so means slower growth and more unemployment or debt.
Of course, it also means that governments can counter this effect by increasing spending – providing more income to the unemployed, for example – with no fear...
5/5
of inflating the currency. Nor will the spending have an impact on the country's debt burden if the resulting increase in debt is less than the contraction in GDP would have been without the spending, as it would be if the spending is distributed towards the poorest.
of inflating the currency. Nor will the spending have an impact on the country's debt burden if the resulting increase in debt is less than the contraction in GDP would have been without the spending, as it would be if the spending is distributed towards the poorest.
