Thorsten Beck, Mohammad Hoseini, 28 August 2020

The high degree of informality in developing countries means most low-income workers have not been able to work from home during the Covid crisis or benefit from employment protection. Despite limited fiscal space and limited access to international financial markets, many developing country governments have implemented support programmes for households and firms. This column assesses the impact of an emergency household loan programme in Iran on consumption. It finds that the loans are positively related with higher consumption of non-durable and semi-durable goods, with no significant effect on the consumption of durables or asset purchases, suggesting that the emergency loans were predominantly used for their intended purpose.

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