The Impact of the COVID-19 Pandemic on Economic Growth and Monetary Policy: An Analysis from the DSGE Model in Vietnam

Trung Duc Nguyen, Anh Le (), El Thalassinos () and Lanh Kim Trieu
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Trung Duc Nguyen: Faculty of Banking, No. 36 Ton That Dam Street, Nguyen Thai Binh Ward, District 1, Ho Chi Minh City 700000, Vietnam
Lanh Kim Trieu: Faculty of Finance, Banking University HCMC, No. 36 Ton That Dam Street, Nguyen Thai Binh Ward, District 1, Ho Chi Minh City 700000, Vietnam

Economies, 2022, vol. 10, issue 7, 1-19

Abstract: Facing the current complicated situation of the COVID-19 pandemic, in addition to medical efforts on disease prevention and treatment, governments of countries also have to come up with solutions to deal with the negative impacts of the pandemic on the economy. This study aims to provide specific, comprehensive, and scientific estimates of the impact of the COVID-19 pandemic on the Vietnamese economy. By using the Bayesian method to estimate DSGE models, research results show that a shock increase by one standard deviation (about 1.49% increase in the probability of a COVID-19 outbreak) to the Covid status variable immediately reduces the output gap by 0.94%. However, this effect only lasts for one quarter, and the output gap widens again. Meanwhile, refinancing interest rates, inflation, and exchange rate changes also have an immediate decline in response to this shock, but the magnitude of the reduction is relatively small.

Keywords: monetary policy; the COVID-19 pandemic; policy responses; DSGE models (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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