Modelling the Effects of a Health Shock on the Armenian Economy

Ani Asoyan (), Vahagn Davtyan (), Haykaz Igityan (), Hasmik Kartashyan () and Hovhannes Manukyan ()
Additional contact information
Ani Asoyan: Monetary Policy Department, Central Bank of Armenia
Vahagn Davtyan: Monetary Policy Department, Central Bank of Armenia
Haykaz Igityan: Monetary Policy Department, Central Bank of Armenia
Hasmik Kartashyan: Monetary Policy Department, Central Bank of Armenia
Hovhannes Manukyan: Monetary Policy Department, Central Bank of Armenia

No 15, Working Papers from Central Bank of Armenia

Abstract: This paper extends the closed economy DSGE model in order to evaluate the impact of the coronavirus on the economy. Our model makes it clear that people's decisions to reduce consumption and working hours due to the health crisis lead to an economic recession. As a result, the spread of the virus declines. Expansionary monetary policy decreases the size of GDP decline, but it is costly in terms of public health. This result shows that there is a trade-off between the output loss caused by the pandemic and the health consequences of the pandemic.

Keywords: DSGE; health; epidemic; COVID-19 (search for similar items in EconPapers)
JEL-codes: E12 E52 I10 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2020-12, Revised 2020-12
New Economics Papers: this item is included in nep-cis, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Russian Journal of Money and Finance, December 2020, pages 18-44
Published in CBA Working Paper Series, December 2020

Downloads: (external link)
https://rjmf.econs.online/en/2020/4/modelling-effe ... ck-armenian-economy/ First version, 2020 (application/pdf)
https://www.cba.am/EN/panalyticalmaterialsresearches/Health_shock.pdf Revised version, 2020 (application/pdf)

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