Lessons from history
In this paper Ma et al. analyze six modern health crises: 1968 Flu, SARS (2003), H1N1 (2009), MERS (2012), Ebola (2014), and Zika (2016) and estimate the impact of these episodes on GDP growth and unemployment, both in the onset year of the crisis as well as the dynamic effects over time. Looking at a large number of countries they get insights into how quickly countries recover economically as well as whether the economic recovery is aided by fiscal policy. Their findings include:
- Bounce-back in GDP growth is rapid, but output is still below pre-shock level five years later. In comparison to a banking crisis, the magnitude from a health crisis in the onset year is comparable to that of a banking crisis, it features faster bounce-back of growth than banking crises;
- Unemployment for less educated workers is higher and exhibits more persistence, and there is significantly greater persistence in female unemployment than male;
- The negative effects on GDP and unemployment are felt less in countries with larger first-year responses in government spending, especially on health care;
- Affected countries’ consumption declines, investment drops sharply, and international trade plummets.
Modern Pandemics: Recession and Recovery
Authors: Chang Ma, John Rogers, Sili Zhou
From: Fudan University, Federal Reserve Board
How has COVID impacted inequality
In this paper Angus Deaton argues that the popular belief that COVID-19 has reduced per capita incomes by more in poor countries than in rich, is false. He compares inequality measures using IMF income estimates pre- and post-pandemic and finds that:
- Rich countries have experienced more deaths per head than have poor countries despite their better health systems, higher incomes, and more capable governments and better preparedness. The US did worse than some rich countries, but better than several others;
- Countries with more deaths saw larger declines in income. As a result, per capita incomes fell by more in higher-income countries;
- Country by country, international income inequality decreased;
- When countries are weighted by population, international income inequality slightly increased in 2020, but this is not because poor countries are falling further behind rich countries because of the pandemic, instead it is because China saw few deaths and experienced positive growth. In other words, the pandemic increased global inequality, because it pulled 1.4 billion (richer) Chinese further ahead of 1.4 billion (poorer) Indians.
COVID-19 and Global Income Inequality
Author: Angus Deaton
From: Princeton University
