Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures
IMF Working Papers, January 28, 2022
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- Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures
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Bibliographic details
- Authors: Amr Hosny, Kevin Pallara
- Published: January 28, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781616357214.001
Main findings
- The type of COVID-19 containment measures affects the trade-offs between infection cases, economic activity and sovereign risk.
- Smart measures (e.g. testing) as opposed to physical measures (e.g. lockdown) appear to be best placed to tackle these trade-offs.
- Initial conditions matter: containment measures can be less disruptive when public health response time is fast and public debt is low.
- Sovereign risk is improved under a combination of large support packages and smart measures, based on a constructed database of daily fiscal announcements for Euro area countries.
Data and methods
- Empirical approach: local projection methods.
- Data: a year and a half of high-frequency daily data covering 44 advanced and emerging economies.
- Additional dataset: a database of daily fiscal announcements for Euro area countries.
Policy implications and recommendations
- Prioritize smart containment measures (for example, testing) to better balance infection control, economic activity preservation, and sovereign risk management.
- Combine large fiscal support packages with smart measures to improve sovereign risk outcomes.
- Strengthen public health response speed to reduce the disruptive impact of containment measures.
- Maintain low public debt where feasible to reduce the economic disruption associated with containment measures.
Subject focus and keywords
- Subject areas: COVID-19, Credit default swap, Fiscal policy, Fiscal space, Health, Money, Public debt.
- Keywords appearing in the source: CDS spread, containment measure, containment measures, COVID-19, Credit default swap, Europe, fiscal measures, fiscal space, Global, IMF working papers, infection case, public health response time, sovereign risk., types of COVID-19 containment, Western Hemisphere.
Amr Hosny, and Kevin Pallara. January 28, 2022. "Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures", IMF Working Papers 2022, 012.
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- Working Paper