The double impact of deep social unrest and a pandemic: Evidence from Chile

Abstract

This work studies the impact of the Social Explosion and COVID-19 crisis on the household sector in Chile. The Social Explosion in October 2019 represented a mass protest, much larger than similar events in other nations such as the yellow jackets. Using delinquency models calibrated with survey data, I show that household debt risk increased substantially after the Social Explosion across all income backgrounds but fell slightly with the COVID-19 pandemic due to the public policies implemented. The expansion of the public support policies in August 2020 decreased the debt risk to levels similar to before the two crises.