The Effects of Fiscal Measures During COVID-19

IMF Working Papers, November 5, 2021

Source details

Canonical URL

The Effects of Fiscal Measures During COVID-19

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Pragyan Deb, Davide Furceri, Jonathan David Ostry, Nour Tawk, Naihan Yang
• Published: November 5, 2021
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781557754264.001

Overview

• Paper objective: Empirically examine the effects of fiscal policy measures during the COVID-19 pandemic.
• Scope: 52 countries, January 1 to December 31, 2020.
• Core approach: Novel database of daily fiscal policy announcements—classified by type of fiscal measure—combined with high-frequency economic indicators.

Key findings

• Fiscal policy announcements have been effective in:
  • Stimulating economic activity.
  • Boosting confidence.
  • Reducing unemployment.
• Effect heterogeneity:
  • Emergency lifeline measures (which form the bulk of below-the-line measures) are more effective when containment policies are stringent, by providing cashflow support to firms and households.
  • Demand-support measures (which comprise most of above-the-line measures) are more effective when containment measures are relaxed.

Methodology and data

• Data sources:
  • Novel database of daily fiscal policy announcements, classified by type of fiscal measure.
  • High-frequency economic indicators covering industrial production, labor, production, unemployment rate, and confidence measures.
• Coverage period: January 1 to December 31, 2020.
• Country coverage: 52 countries.

Policy implications and interpretation

• Tailor fiscal measures to public-health containment context:
  • Use emergency lifeline (below-the-line) measures to support cashflow for firms and households when containment policies are stringent.
  • Employ demand-support (above-the-line) measures when containment measures are relaxed to maximize effectiveness in stimulating demand.
• Recognize heterogeneity across countries: policy design should account for country characteristics that influence fiscal measure effectiveness.

Keywords and subject tags

• Subject: COVID-19, Fiscal policy, Fiscal stimulus, Health, Industrial production, Labor, Production, Unemployment rate
• Keywords: containment policy, COVID-19, demand-support measure, emergency lifeline, Fiscal policy, fiscal policy announcement, Fiscal stimulus, Global, high-frequency data., industrial production, Industrial production, multipliers, Unemployment rate

Content in this bundle

• Working Paper
  • Working Paper (Markdown version)
  • Working Paper (PDF)