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Modelling the Effects of a Health Shock on the Armenian Economy

Ani Asoyan (), Vahagn Davtyan (), Haykaz Igityan (), Hasmik Kartashyan () and Hovhannes Manukyan ()
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Ani Asoyan: Central Bank of Armenia
Vahagn Davtyan: Central Bank of Armenia
Haykaz Igityan: Central Bank of Armenia
Hasmik Kartashyan: Central Bank of Armenia
Hovhannes Manukyan: Central Bank of Armenia

Russian Journal of Money and Finance, 2020, vol. 79, issue 4, 18–44

Abstract: This paper extends the closed economy DSGE model in order to evaluate the impact of the coronavirus on the economy. Our model makes it clear that people's decisions to reduce consumption and working hours due to the health crisis lead to an economic recession. As a result, the spread of the virus declines. Expansionary monetary policy decreases the size of GDP decline, but it is costly in terms of public health. This result shows that there is a trade-off between the output loss caused by the pandemic and the health consequences of the pandemic.

Keywords: DSGE; health; pandemic; COVID-19 (search for similar items in EconPapers)
JEL-codes: E12 E52 I10 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.31477/rjmf.202004.18

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