COVID-19 and the Impact on Debt: Policy Implications

Thouraya Bahri () and Aditya Singh ()
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Thouraya Bahri: Department of Economics, New School for Social Research
Aditya Singh: Department of Economics, New School for Social Research

No 2107, Working Papers from New School for Social Research, Department of Economics

Abstract: Given the outbreak of COVID-19, the economic crisis that has unfurled globally is a matter of grave concern. This paper — by using a survival analysis model — argues that countries that are suffering through debt would fall into a recessionary spiral if their debt obligations are not restructured or alleviated to incorporate the unprecedented impacts of the pandemic. We provide examples of cases where such restructuring has worked. We argue not to revert to the norm of incurring further debt to pay-off older debt. Rather, the case is made to use deficit spending to mitigate the economic crisis and also prepare governments for potential climate disasters by funding green fiscal policy.

Keywords: Economic growth; COVID-19 pandemic; debt; pandemic; fiscal policy (search for similar items in EconPapers)
JEL-codes: O11 O21 O23 O44 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2021-04
New Economics Papers: this item is included in nep-pke
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http://www.economicpolicyresearch.org/econ/2021/NSSR_WP_072021.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:2107

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