Initial Output Losses from the Covid-19 Pandemic: Robust Determinants

Author/Editor:

Davide Furceri ; Michael Ganslmeier ; Jonathan David Ostry ; Naihan Yang

Publication Date:

January 29, 2021

Electronic Access:

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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:

While the COVID-19 pandemic is affecting all countries, output losses vary considerably across countries. We provide a first analysis of robust determinants of observed initial output losses using model-averaging techniques—Weighted Average Least Squares and Bayesian Model Averaging. The results suggest that countries that experienced larger output losses are those with lower GDP per capita, more stringent containment measures, higher deaths per capita, higher tourism dependence, more liberalized financial markets, higher pre-crisis growth, lower fiscal stimulus, higher ethnic and religious fractionalization and more democratic regimes. With respect to the first factor, lower resilience of poorer countries reflects the higher economic costs of containment measures and deaths in such countries and less effective fiscal and monetary policy stimulus.

Series:

Working Paper No. 2021/018

Subject:

Frequency:

regular

English

Publication Date:

January 29, 2021

ISBN/ISSN:

9781513567013/1018-5941

Stock No:

WPIEA2021018

Format:

Paper

Pages:

53

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