A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest

Author/Editor:

Tahsin Saadi Sedik ; Rui Xu

Publication Date:

October 16, 2020

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

In this paper we analyze the dynamics among past major pandemics, economic growth, inequality, and social unrest. We provide evidence that past major pandemics, even though much smaller in scale than COVID-19, have led to a significant increase in social unrest by reducing output and increasing inequality. We also find that higher social unrest, in turn, is associated with lower ourput and higher inequality, pointing to a vicious cycle. Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come.

Series:

Working Paper No. 20/216

Frequency:

regular

English

Publication Date:

October 16, 2020

ISBN/ISSN:

9781513559162/1018-5941

Stock No:

WPIEA2020216

Format:

Paper

Pages:

22

Please address any questions about this title to publications@imf.org