COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows

Cem Çakmaklı, Selva Demiralp, Sebnem Kalemli-Ozcan, Sevcan Yesiltas and Muhammed Yildirim

No 2020/133, IMF Working Papers from International Monetary Fund

Abstract: We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and demand shocks with credit card purchases. Both shocks are also affected from changing infection rates under different lockdown scenarios. Being an open economy amplifies the economic costs through two main channels. First, the demand shock has domestic and external components. Second, the initial shock is magnified due to domestic and international input-output linkages.

Keywords: WP; stimulus package; open economy; inflation rate; COVID-19; Debt Monetisation; External Finance; SIR; Input-Output Tables; Emerging Markets; economic cost; monetary policy; foreign currency; debt monetization; supply and demand; total output; utility function; swap line; Demand elasticity; Global; closed economy; Unconventional monetary policies (search for similar items in EconPapers)
Pages: 74
Date: 2020-07-17
New Economics Papers: this item is included in nep-mac
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