Download This PaperLonger-run Economic Consequences of Pandemics
22 Pages Posted: 6 Apr 2020 Last revised: 4 Feb 2026
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Longer-run Economic Consequences of Pandemics
Longer-Run Economic Consequences of Pandemics
Date Written: April 2020
Abstract
What are the medium- to long-term effects of pandemics? How do they differ from other economic disasters? We study major pandemics using the rates of return on assets stretching back to the 14th century. Significant macroeconomic after-effects of pandemics persist for about decades, with real rates of return substantially depressed, in stark contrast to what happens after wars. Our findings are consistent with the neoclassical growth model: capital is destroyed in wars, but not in pandemics; pandemics instead may induce relative labor scarcity and/or a shift to greater precautionary savings.
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