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

_IMF Working Papers, January 29, 2021_

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## Bibliographic details
- Authors: Davide Furceri, Jonathan David Ostry
- Published: January 29, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513567013.001

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### Summary and primary findings
- Objective: Provide a first analysis of robust determinants of observed initial output losses using model-averaging techniques—Weighted Average Least Squares (WALS) and Bayesian Model Averaging (BMA).
- Core finding: Countries that experienced larger initial output losses during the COVID-19 pandemic tend to have the following characteristics:
  - 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
  - more democratic regimes
- Interpretation regarding GDP per capita: 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.

### Methodology
- Techniques used:
  - Weighted Average Least Squares (WALS)
  - Bayesian Model Averaging (BMA)
- Scope: Analysis of determinants of observed initial output losses across countries during the COVID-19 pandemic.

### Policy-relevant implications and considerations
- Fiscal and monetary policy effectiveness: Lower fiscal stimulus is associated with larger initial output losses, implying policy response strength matters for resilience.
- Vulnerabilities: Higher tourism dependence and more liberalized financial markets are associated with larger losses, indicating exposure channels to pandemic shocks.
- Socio-political factors: Higher ethnic and religious fractionalization and more democratic regimes are linked to larger initial output losses, suggesting institutional and social dimensions affect outcomes.
- Health and containment trade-offs: More stringent containment measures and higher deaths per capita are associated with larger output losses, highlighting trade-offs between public-health measures and short-term economic performance.
- Distributional implication: Poorer countries (lower GDP per capita) are less resilient due to both higher costs of containment/deaths and less effective policy responses.

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_Source: https://www.imf.org/en/publications/wp/issues/2021/01/29/initial-output-losses-from-the-covid-19-pandemic-robust-determinants-50025_