Journal of Financial Economics Vol. 170 2025
Revenue collapses and the consumption of small business owners in the COVID-19 pandemic
Abstract
Using financial account data linking small businesses to their owner households, we examine how business owners’ consumption responded to changes in business revenues during the COVID-19 crisis. In the first two months following the National Emergency, business revenues declined by 40 percent, largely driven by national factors rather than local infection rates or policies. However, the pass-through of revenue losses to owner consumption was limited: each dollar of revenue loss resulted in only a 1.6-cent decline in consumption. This muted pass-through persisted through 2021, even after the introduction of COVID-19 vaccines. Our findings suggest that federal subsidies and pandemic-induced reductions in spending opportunities explain the limited impact.
- DOI
- 10.1016/j.jfineco.2025.104079
- Volume
- 170
- Pages
- 104079
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref