Viral shocks to the world economy

Konstantin A. Kholodilin and Malte Rieth

European Economic Review, 2023, vol. 158, issue C

Abstract: We construct a global index of epidemic news based on text analysis of newspapers from 17 countries. We apply the index to study the economic consequences of epidemics on the world economy in structural vector autoregressions. Epidemic shocks exert significantly and persistently negative effects on output and prices that last for up to two years. There is no quick recovery and no overshooting. The output losses are permanent. Country studies show that the direct effects are substantially larger than the indirect effects through trade and financial markets. Furthermore, the simultaneous fall of output and prices suggests that demand dominate supply contractions and that monetary and fiscal stimuli are appropriate crisis responses to minimize permanent output losses.

Keywords: Epidemics; Pandemics; Text analysis; Structural vector autoregressions; Covid-19; World economy (search for similar items in EconPapers)
JEL-codes: C32 E62 H12 I18 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292123001551
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:158:y:2023:i:c:s0014292123001551

DOI: 10.1016/j.euroecorev.2023.104526

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().