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<p>The emergency phase of the COVID-19 pandemic ended in the spring of 2023, but the pace of economic recovery differs depending on the country. In particular, the recovery of consumption has varied widely, with many countries experiencing contraction or stagnation. This paper investigates the cause of this peculiar phenomenon as a serious impact on individual preferences and develops an analysis that serves as a first step toward clarifying and understanding the current macroeconomic situation by using an existing dynamic model with endogenous time preferences. Although we assume a case in which the long-run equilibrium is uniquely determined, it turns out that situations can arise where the path toward the equilibrium is indeterminate. An endogenously determined time preference rate, which depends on aggregate consumption and public health levels, is one source of such indeterminacy. We apply the various equilibrium converging paths introduced by such indeterminacy to the interpretation of the macroeconomic adjustment process during the recent COVID-19 pandemic.</p>

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Slow consumption recovery after the pandemic: perspective from a time preference approach

  • 期刊论文

  • 发表日期：

    2025年5月11日

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  • Kei Hosoya

摘要

The emergency phase of the COVID-19 pandemic ended in the spring of 2023, but the pace of economic recovery differs depending on the country. In particular, the recovery of consumption has varied widely, with many countries experiencing contraction or stagnation. This paper investigates the cause of this peculiar phenomenon as a serious impact on individual preferences and develops an analysis that serves as a first step toward clarifying and understanding the current macroeconomic situation by using an existing dynamic model with endogenous time preferences. Although we assume a case in which the long-run equilibrium is uniquely determined, it turns out that situations can arise where the path toward the equilibrium is indeterminate. An endogenously determined time preference rate, which depends on aggregate consumption and public health levels, is one source of such indeterminacy. We apply the various equilibrium converging paths introduced by such indeterminacy to the interpretation of the macroeconomic adjustment process during the recent COVID-19 pandemic.