Recoveries After Pandemics: The Role of Policies and Structural Features

IMF Working Papers, July 9, 2021

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Canonical URL: Recoveries After Pandemics: The Role of Policies and Structural Features

Authors: Juan Pablo Cuesta Aguirre, Swarnali A Hannan
Date: July 9, 2021
Objective: To shed light on the possible scarring effects from Covid-19 by studying the economic effects of five past pandemics.
Sample and period: fifty-five countries over 1990-2019.
Method: local projections.

Pandemics have detrimental medium-term effects on:
- output
- unemployment
- poverty
- inequality
Fiscal support mitigates adverse effects:
- The adverse output effects are limited for countries that provided relatively greater fiscal support.
- Increases in unemployment, poverty, and inequality are lower for countries with relatively greater fiscal support.
Role of initial structural conditions:
- Countries with relatively stronger initial conditions (as defined by higher formality, family benefits, and health spending per capita) experienced lower increases in unemployment, poverty, and inequality.

Provide relatively greater fiscal support during pandemics to limit adverse output effects.
Strengthen structural features before crises:
- Increase formality.
- Expand family benefits.
- Raise health spending per capita.
Use policies to alleviate suffering and foster an inclusive recovery by targeting both fiscal relief and structural reforms.

Subject: COVID-19, Expenditure, Health, Health care spending, Income inequality, Maternity and childcare benefit spending, National accounts, Poverty
Keywords: copyright page, COVID-19, expenditure group, fiscal support, Global, group four, Health care spending, health expenditure., Income inequality, increases in unemployment, inequality, informality, Maternity and childcare benefit spending, output, pandemics, potential GDP, poverty, social expenditure, unemployment