Modern Pandemics: Recession and Recovery

88 Pages Posted: 15 Apr 2020 Last revised: 21 Mar 2022

See all articles by Chang Ma

Chang Ma

Fudan University - Fanhai International School of Finance (FISF)

John H. Rogers

Fudan University - Fanhai International School of Finance (FISF)

Sili Zhou

Fudan University - Fanhai International School of Finance (FISF)

Date Written: June 1, 2020

Abstract

We examine the immediate and bounce-back effects from six modern health crises that preceded Covid-19. Time-series models for a large cross-section of economies indicate that real GDP growth falls by around two percentage points in affected economies relative to unaffected economies in the year of the outbreak. Bounce-back in GDP growth is rapid and strong, especially when compared to non-health crises. Unemployment for less educated workers is higher and exhibits more persistence, and there is significantly greater persistence in female unemployment than male. Moreover, the negative initial effects of pandemics and bounce-back are economically contagious through international trade. The negative effects on GDP and unemployment are felt less in economies with larger first-year responses in government spending, especially on health care. Our estimates imply that the impact effect of the Covid-19 shock on world GDP growth is approximately four standard deviations worse than the average past pandemic.

Keywords: Health crises; COVID-19; Output loss; Unemployment; Trade network; Fiscal policy

JEL Classification: I10, E60, F40

Suggested Citation

Ma, Chang and Rogers, John H. and Zhou, Sili, Modern Pandemics: Recession and Recovery (June 1, 2020). Available at SSRN: https://ssrn.com/abstract=3565646 or http://dx.doi.org/10.2139/ssrn.3565646

Chang Ma (Contact Author)

Fudan University - Fanhai International School of Finance (FISF) ( email )

China

John H. Rogers

Fudan University - Fanhai International School of Finance (FISF) ( email )

220 Handan Road
Shanghai, 200433
China

Sili Zhou

Fudan University - Fanhai International School of Finance (FISF) ( email )

220 Handan Road
Shanghai, 200433
China

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