COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows

75 Pages Posted: 12 Aug 2020

See all articles by Cem Cakmakli

Cem Cakmakli

Koc University - Department of Economics

Selva Demiralp

Koc University - Department of Economics

Sebnem Kalemli Ozcan

International Monetary Fund (IMF)

Sevcan Yesiltas

Koc University

Muhammed A. Yildirim

Koc University - Department of Economics; Harvard University - Center for International Development (CID)

Date Written: July 1, 2020

Abstract

We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and demand shocks with credit card purchases. Both shocks are also affected from changing infection rates under different lockdown scenarios. Being an open economy amplifies the economic costs through two main channels. First, the demand shock has domestic and external components. Second, the initial shock is magnified due to domestic and international input-output linkages.

Keywords: Economic conditions, Economic models, Financial crises, Supply and demand, Economic policy, COVID-19, Debt Monetisation, External Finance, SIR, Input-Output Tables, Emerging Markets, WP, lockdown, I-O, economic cost, supply shock, infection rate

JEL Classification: E61, F00, C51, E01, G21, E52, F16, H63

Suggested Citation

Cakmakli, Cem and Demiralp, Selva and Kalemli Ozcan, Sebnem and Yesiltas, Sevcan and Yildirim, Muhammed A., COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows (July 1, 2020). IMF Working Paper No. 20/133, Available at SSRN: https://ssrn.com/abstract=3670613

Cem Cakmakli (Contact Author)

Koc University - Department of Economics ( email )

Rumeli Feneri Yolu
Sariyer 80910, Istanbul
Turkey

Selva Demiralp

Koc University - Department of Economics ( email )

Rumeli Feneri Yolu
Sariyer 80910 Istanbul
Turkey
+212 338 1842 (Phone)

Sebnem Kalemli Ozcan

International Monetary Fund (IMF) ( email )

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

Sevcan Yesiltas

Koc University

Muhammed A. Yildirim

Koc University - Department of Economics ( email )

Rumeli Feneri Yolu
Sariyer 80910, Istanbul
Turkey

Harvard University - Center for International Development (CID) ( email )

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

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