A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest

Tahsin Saadi Sedik () and Rui Xu

No 2020/216, IMF Working Papers from International Monetary Fund

Abstract: In this paper we analyze the dynamics among past major pandemics, economic growth, inequality, and social unrest. We provide evidence that past major pandemics, even though much smaller in scale than COVID-19, have led to a significant increase in social unrest by reducing output and increasing inequality. We also find that higher social unrest, in turn, is associated with lower ourput and higher inequality, pointing to a vicious cycle. Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come.

Keywords: Covid-19; Pandemics; Inequality; Social Unrest; WP; pandemic event; panel VAR model; disorder score; panel vector autoregressions; pandemic dummy; net Gini coefficient; Income inequality; Vector autoregression; Communicable diseases; Global (search for similar items in EconPapers)
Pages: 22
Date: 2020-10-16
New Economics Papers: this item is included in nep-cwa
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Citations: View citations in EconPapers (22)

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