Far more than a shot in the arm: Vaccines and consumer spending

The spread of the COVID-19 pandemic, along with government interventions, significantly reshaped economic activity, leading to abrupt shifts in household consumption behavior. This paper offers an empirical analysis of how the rollout of COVID-19 vaccines influenced consumer spending, using high-frequency debit and credit card transaction data from three European countries. The findings indicate that vaccinations, in conjunction with other policy measures, helped mitigate the pandemic's severe economic impact and supported a recovery in consumer spending. First, the deployment of vaccines had a statistically and economically significant positive effect on private consumption. Second, additional policy responses-aimed at containing the virus and providing financial support to households and businesses-also had notable effects on both the volume and composition of card-based transactions. Third, the stimulative impact of vaccinations on consumer spending was more pronounced in contact-intensive sectors, such as services, compared to goods.