A Feast in Time of Plague: Debt-Financed Spending Spree during the Pandemic

Abstract

The paper explores the nexus between household consumption, financialization, and socio-economic policy. We focus on the recent episode of debt-financed buying of passenger cars which took place in Russia in 2020–21, amidst the Covid pandemic. We collect statistics on car sales, car loans and household income, and construct metrics to gauge leveraged car buying. The latter is found to be relatively inelastic to the price of a car and personal income. Two specific factors are highlighted: (a) speculation, alias hedging, to which households resort under financial instability; and (b) government policy aiming to facilitate household access to car loans. Conceived as a palliative against the pain of economic downturn, loan availability might instead bolster speculative demand and inflate price bubbles. The paper contributes to the body of literature on the sociology of consumption, household financialization, and the political economy of lending.