The Effects of COVID-19 Vaccines on Economic Activity

IMF Working Papers, October 19, 2021

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The Effects of COVID-19 Vaccines on Economic Activity

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Bibliographic details

• Authors: Pragyan Deb, Davide Furceri, Daniel Jimenez, Siddharth Kothari, Jonathan David Ostry, Nour Tawk
• Published: October 19, 2021
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781589063761.001

Overview

• Paper objective: Empirically examine the economic effects of COVID-19 vaccine rollouts using a cross-country daily database of vaccinations and high frequency indicators of economic activity.
• Authors: Pragyan Deb, Davide Furceri, Daniel Jimenez, Siddharth Kothari, Jonathan David Ostry, Nour Tawk.
• Publication date: October 19, 2021.
• Sample coverage: 46 countries over the period December 16, 2020 to June 20, 2021.

Data and methodology

• High-frequency activity indicators used:
  • Nitrogen dioxide (NO2) emissions.
  • Carbon monoxide (CO) emissions.
  • Google mobility indices.
• Identification strategy:
  • Uses surprises in vaccines administered (vaccine surprises) to identify causal effects of vaccination increases on economic activity.

Key empirical findings

• An unexpected increase in vaccination per capita is associated with a significant increase in economic activity.
• Evidence for non-linear effects:
  • The marginal economic benefits of vaccination are larger when vaccination rates are higher.
• Role of country-specific conditions:
  • Lower economic gains from vaccination if strict containment measures are in place.
  • Lower economic gains if the country is experiencing a severe outbreak.
• Cross-border effects:
  • Results provide evidence of spillovers across borders, underscoring the importance of equitable access to vaccines across nations.

Policy implications and recommendations

• Vaccine rollouts can materially boost short-run economic activity through channels captured by NO2, CO, and mobility indicators.
• Maximizing economic gains from vaccination may require:
  • Achieving higher vaccination rates where marginal benefits are larger.
  • Coordinating containment policies with vaccination progress to avoid blunting economic gains.
  • Addressing severe outbreaks alongside vaccination to preserve economic benefits.
• International coordination:
  • Evidence of cross-border spillovers highlights the economic rationale for equitable access to vaccines across countries.

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