Measuring the Economic Risk of COVID-19

21 Pages Posted: 23 Jun 2020

See all articles by Ilan Noy

Ilan Noy

Victoria University of Wellington

Nguyen Doan

Victoria University of Wellington

Benno Ferrarini

Asian Development Bank

Donghyun Park

Asian Development Bank - Economic Research

Date Written: 2020

Abstract

We measure the economic risk of COVID-19 at a geo-spatially detailed resolution. In addition to data about the current prevalence of confirmed cases, we use data from 2014-2018 and a conceptual disaster risk model to compute measures for exposure, vulnerability, and resilience of the local economy to the shock of the epidemic. Using a battery of proxies for these four concepts, we calculate the hazard, the principal components of exposure and vulnerability to it, and of the economy's resilience (i.e., its ability of the recover rapidly from the shock). We find that the economic risk of this pandemic is particularly high in most of Sub-Saharan Africa, South Asia, and Southeast Asia. These results are consistent when comparing an ad-hoc equal weighting algorithm for the four components of the index, an algorithm that assumes equal hazard for all countries, and one based on estimated weights using previous aggregated Disability-Adjusted Life Years losses associated with communicable diseases.

Keywords: epidemic, COVID-19, risk measurement, economic impact

JEL Classification: I100

Suggested Citation

Noy, Ilan and Doan, Nguyen and Ferrarini, Benno and Park, Donghyun, Measuring the Economic Risk of COVID-19 (2020). CESifo Working Paper No. 8373, Available at SSRN: https://ssrn.com/abstract=3633658

Ilan Noy (Contact Author)

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Nguyen Doan

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Benno Ferrarini

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Donghyun Park

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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