The Impact of COVID-19 Lockdowns on Household Income, Consumption, and Expectations: Evidence from High-frequency Data in Indonesia

Organisation: SMERU

Authors: Asep Suryahadi, Affandi Ismail, Masagus M. Ridwan, Jahen F. Rezki, Arief Ramayandi
Research Themes:
Poverty and economic security
Health security
Type: Journal Articles
19 January 2023


We investigate the causal impact of COVID-19, through lockdowns, on household income, income expectations, consumption of durable goods, and budget allocation in Indonesia using high-frequency data from the monthly Bank Indonesia consumer survey with more than 176,000 respondents. We find that COVID-19 lockdowns have a large and significant adverse impact on households’ income, expectations, and consumption. We also find that households try to smooth consumption in the face of declining income, resulting in a significant increase in the budget allocation for consumption while reducing the shares of debt installments and savings. The impact of lockdown on households is also heterogeneous by expenditure levels, regions, and levels of education. These findings have important policy implications to cushion the pandemic’s impact on households and ensure a more inclusive recovery.