In this paper, we investigate how a transitory lockdown of a sector of the economy may have changed our habits and, therefore, altered the goods’ demand permanently. In a two-sector infinite horizon economy, we show that the demand of the goods produced by the sector closed during the lockdown could shrink or expand with respect to their pre-pandemic level depending on the lockdown’s duration and the habits’ strength. We also show that the end of a lockdown may be characterized by a price surge due to a combination of strong demand of both goods and rigidities in production.
Bambi, Mauro; Ghilli, Daria; Gozzi, Fausto; Leocata, Marta. (2024). Habits and demand changes after COVID-19. JOURNAL OF MATHEMATICAL ECONOMICS, (ISSN: 0304-4068), 110: 1-13. Doi: 10.1016/j.jmateco.2023.102933.
Habits and demand changes after COVID-19
Ghilli, Daria;Gozzi, Fausto;Leocata, Marta
2024
Abstract
In this paper, we investigate how a transitory lockdown of a sector of the economy may have changed our habits and, therefore, altered the goods’ demand permanently. In a two-sector infinite horizon economy, we show that the demand of the goods produced by the sector closed during the lockdown could shrink or expand with respect to their pre-pandemic level depending on the lockdown’s duration and the habits’ strength. We also show that the end of a lockdown may be characterized by a price surge due to a combination of strong demand of both goods and rigidities in production.
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