COVID-19 Pandemic and economic stimulus policy inequality: evidence from quasi-natural experiments

Xingyuan Yao ()
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Xingyuan Yao: Zhejiang Financial College

No 585, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: This paper investigates the impact of the COVID-19 pandemic on economic stimulus policy inequality. Using the standard DID and continuous variable DID methods with data from 156 economies, empirical results show that, deaths tolls have a greater impact on economic stimulus policies than cases; the cumulative effect is more influential to economic stimulus than the short-term effect. Among other additional socio-economic determinants, economic development level is robustly positively correlated with the economic stimulus intensity, while the medical condition is negatively correlated. Population density and proportion of aging population are positively correlated with the intensity of fiscal policies. Heterogeneity tests show that while economic policies are used in developed economies more often, restrictive measures in developing countries may be used as a substitute for economic stimulus. Our results show that the impact of the epidemic may have increased economic inequality to some extent due to the impact of policy capabilities, requiring international coordination and assistance to low - and middle-income countries.

Keywords: COVID-19 Pandemic; Economic stimulus policy; Economic inequality; Quasi-natural experiment (search for similar items in EconPapers)
JEL-codes: E50 E62 O23 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-07
New Economics Papers: this item is included in nep-mac
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