The government's '150,000 to 500,000 won nationwide consumption recovery coupon' payment policy is drawing attention to whether it will lead to actual consumption stimulation effects. In this context, an analysis of the new consumption creation effect during the past COVID-19 disaster relief fund payments, estimated at 20 to 40%, is being highlighted.
On the 22nd, Kim Mi-ru, a researcher at the Korea Development Institute (KDI), and others analyzed the effects of the first COVID-19 emergency disaster relief fund paid in May 2020, finding that the sales increase effect was 26.2 to 36.1% of the total budget input in eligible business sectors.
At that time, the government provided 400,000 to 1,000,000 won in emergency disaster relief funds per household.
The effects varied by industry. There was a significant effect in (semi-)durable goods and necessities that did not require face-to-face contact, while it was relatively smaller in face-to-face service industries and food services.
In a paper by Lee Woo-jin of Korea University, Kang Chang-hee of Chung-Ang University, and Woo Seok-jin of Myongji University, the marginal propensity to consume from the COVID-19 emergency relief funds was estimated to range from 0.362 to 0.421 in the second quarter of 2020 and from 0.401 to 0.481 in the third quarter. When combining the second and third quarters of 2020, it was estimated to be around 0.654 to 0.782.
This means that among the total of about 21.7 trillion won in emergency relief funds paid by the government in the second and third quarters of 2020, about 14.2 trillion to 17 trillion won was used for consumption expenditure.
According to an analysis by the National Bureau of Economic Research, 25 to 40% of the disaster relief funds in the U.S. in 2020 led to consumption effects.
Unlike during the pandemic, face-to-face consumption is now smooth, and domestic demand has been stagnant for a long time. In this regard, there is also a prospect that the consumption effect could be greater.
Experts, including Kim Mi-ru, expect that this consumption recovery coupon will also show a propensity to consume of up to 40%. If a family of four receives 1,000,000 won, it means that 400,000 won will lead to additional consumption.
Earlier, on the 19th, the Ministry of Economy and Finance announced the supplementary budget proposal, stating it would distribute 13.2 trillion won worth of 'consumption recovery coupons.'
The coupons will be distributed in two phases, and combined, the amount per person will be ▲15,000 won for the top 10% of income earners (5.12 million people) ▲25,000 won for the general public (4.296 million people) ▲40,000 won for near-poor households (380,000 people) ▲50,000 won for ultra-low-income recipients (2.71 million people). An additional 20,000 won will be provided for each person in 84 rural areas facing population extinction.