Household Coping and Response to Government Stimulus in an Economic Crisis : Evidence from Thailand

The crash of global financial markets in 2008 caused a ripple effect on economic demand and growth worldwide. Export-oriented economies were hit particularly hard, and many governments stepped in quickly with broad-ranging stimulus programs to less...

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Bibliographic Details
Main Authors:	Khandker, Shahidur R., Koolwal, Gayatri B., Haughton, Jonathan, Jitsuchon, Somchai
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	AGRICULTURE ALLOCATION ALLOWANCES ALTERNATIVE ENERGY BALANCE SHEET BANK LENDING BENEFICIARY BOND BORROWING COSTS CHECKS CHRONIC ILLNESS CLIMATE COMMERCIAL BANKS COMMODITIES COMMODITY COMMODITY PRICES CONSUMER PRICE CONSUMER PRICE INDEX CONSUMER SPENDING CONSUMERS CONSUMPTION EXPENDITURE CONSUMPTION EXPENDITURES CONSUMPTION INSURANCE CONSUMPTION SMOOTHING CONSUMPTION VOLATILITY COUNTERFACTUAL CREDIT GUARANTEES CURRENCY CURRENCY DEVALUATION DATA AVAILABILITY DEBT DEBT REPAYMENT DEBTS DEMOGRAPHIC DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISTRIBUTIONAL IMPACTS DOMESTIC PRICES ECONOMETRICS ECONOMIC CONDITIONS ECONOMIC CRISIS ECONOMIC DEMAND ECONOMIC DOWNTURN ECONOMIC HISTORY ECONOMIC SECTORS ECONOMIC SHOCKS ECONOMIC SURVEYS ENDOGENOUS VARIABLES ENERGY-INTENSIVE GOODS EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORT MARKET EXPORT SECTOR EXPORTS EXPOSURE FARM HOUSEHOLDS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICY FLOW OF CREDIT FOOD PRICES FUEL PRICES GDP GLOBAL FINANCIAL MARKETS GLOBAL MARKETS GOVERNMENT DEFICITS GOVERNMENT FUNDS GOVERNMENT INTERVENTIONS GOVERNMENT POLICIES GOVERNMENT POLICY GOVERNMENT SPENDING GOVERNMENT SUBSIDIES GOVERNMENT SUPPORT HEALTH PROGRAMS HOUSEHOLD CONSUMPTION HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD PARTICIPATION HOUSEHOLD WELFARE IDIOSYNCRATIC SHOCKS IMPORTS INCOME INCOME FLUCTUATIONS INCOME SHOCKS INCOME TAX INCOME VARIABILITY INCOME VOLATILITY INCREASE IN CONSUMPTION INFLATION INFLATIONARY PRESSURES INSTRUMENT INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL BANK JOB CREATION JOBS LABOR MARKETS LABOR SUPPLY LOAN LOAN REPAYMENT LOAN REPAYMENT RATE LOCAL ECONOMY LOW-INCOME COUNTRIES MARKET CONDITIONS MICROCREDIT MIDDLE-INCOME COUNTRIES MONETARY ECONOMICS MONETARY POLICY MONETARY TERMS MULTIPLIER EFFECTS NATIONAL ACCOUNTS NET EXPORTS OIL PRICE OIL PRICES OPEN ECONOMY OUTSTANDING LOANS PENSION PER CAPITA CONSUMPTION PER CAPITA INCOME POLICY RESPONSE POLICY RESPONSES POLITICAL ECONOMY POLITICAL UNCERTAINTY POOR POOR COUNTRIES POOR FARMERS POOR HOUSEHOLDS POVERTY LINE PRICE FLUCTUATIONS PUBLIC DEBT PUBLIC ECONOMICS REAL EXCHANGE RATE RURAL RURAL AREAS RURAL DEVELOPMENT RURAL HEALTH RURAL HOUSEHOLDS RURAL PARTICIPATION RURAL POOR SAFETY NET SAFETY NET MEASURES SAFETY NET PROGRAMS SAVINGS SMALL ENTERPRISES SMOOTHING CONSUMPTION SOCIAL ASSISTANCE SOCIAL SECURITY STATE ENTERPRISE TARGETING TAX TAX BENEFITS TAX RATE TRADE FINANCE TRANSFER PROGRAMS UNEMPLOYMENT UNEMPLOYMENT RATE UNEMPLOYMENT RATES VILLAGE FUND VOLATILITY
Online Access:	http://documents.worldbank.org/curated/en/2012/03/15981093/household-coping-response-government-stimulus-economic-crisis-evidence-thailand http://hdl.handle.net/10986/19865

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Summary:	The crash of global financial markets in 2008 caused a ripple effect on economic demand and growth worldwide. Export-oriented economies were hit particularly hard, and many governments stepped in quickly with broad-ranging stimulus programs to lessen the effects on households of rising unemployment and falling income. To better understand the role that stimulus policy might play in softening the effects of these shocks, this paper examines recent nationally-representative data from Thailand, an export-dependent economy where a large-scale stimulus program was introduced in 2009. Using monthly data spanning 2006-2010, the paper uses sub-province-level community panel data to examine the effects of major components of the stimulus on household consumption, income, borrowing, and debt repaid. To address simultaneity of changes in government spending and household outcomes, the analysis estimates a dynamic panel regression, instrumenting the stimulus effect with second-order lagged outcome variables, and estimating the model using the Generalized Method of Moments. The results suggest that household participation in these programs helped smooth consumption. This increase in monthly consumption was not supported from household receipts from the government stimulus, but more likely through a reallocation of consumption and savings that included greater debt repayment. The paper typically finds stronger effects in urban compared with rural areas.

Household Coping and Response to Government Stimulus in an Economic Crisis : Evidence from Thailand

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