Income Convergence or Divergence in the Aftermath of the COVID-19 Shock?

37 Pages Posted: 8 Jul 2022

See all articles by Mariya Brussevich

Mariya Brussevich

International Monetary Fund (IMF)

Shihui Liu

International Monetary Fund (IMF)

Chris Papageorgiou

International Monetary Fund (IMF) - Research Department

Date Written: June 1, 2022

Abstract

The paper extends the work of Deaton (2021) by exploring the period of post-crisis recovery in 2021-2024. The paper documents per-capita income divergence during the period of post-shock recovery, with countries at the bottom of the income distribution falling significantly behind. Findings suggest that higher COVID-19 vaccination rates and targeted virus containment measures are associated with faster recovery in per-capita incomes in the medium term. Evidence on the effectiveness of economic support policies for reducing cross-country income inequality, including fiscal and monetary policies, is mixed especially in the case of developing countries.

Keywords: COVID-19, convergence, divergence, support policies, income convergence, convergence coefficient, vaccination rate, health impact, targeted virus containment measure, Income, Income inequality, Service exports, Global

JEL Classification: D63, I10, O11, O47, I12, E25, F10

Suggested Citation

Brussevich, Mariya and Liu, Shihui and Papageorgiou, Chris, Income Convergence or Divergence in the Aftermath of the COVID-19 Shock? (June 1, 2022). IMF Working Paper No. 2022/121, Available at SSRN: https://ssrn.com/abstract=4154580

Mariya Brussevich (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Shihui Liu

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Chris Papageorgiou

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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