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Are Temporary or Permanent Income Payments Better Placed to Boost Demand during Covid-19?

  • Rajiv Prabhakar EMAIL logo
Published/Copyright: October 20, 2021

Abstract

Covid-19 has sparked calls for a universal basic income as a way of coping with a demand shock caused by the pandemic. Temporary income payments have been part of the emergency response to the pandemic. This paper questions the effectiveness of temporary payments as a way to raise demand. Some observers claim that vouchers are better targeted at sectors hit hard by Covid-19 as people may have a tendency to save than spend from temporary payments. There may be a stronger case for permanent rather than temporary payments if the aim is to boost demand in the economy.


Corresponding author: Rajiv Prabhakar, Economics, The Open University, Milton Keynes, MK7 6AA, UK, E-mail:

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Received: 2020-07-24
Accepted: 2021-10-05
Published Online: 2021-10-20

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