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Macroeconomic Effects of COVID-19 Pandemic: Fresh Evidence from Korea

Yugang He () and Yinhui Wang ()
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Yugang He: College of Liberal Arts, Sejong University, Seoul 05006, Korea
Yinhui Wang: College of Commerce, Jeonbuk National University, Jeonju 54896, Korea

Sustainability, 2022, vol. 14, issue 9, 1-14

Abstract: Korea’s economy has suffered greatly as a result of the COVID-19 pandemic. Based on such a background, this paper investigates the macroeconomic effects of the COVID-19 pandemic. Via impulse response function analysis, the results reveal that the COVID-19 pandemic has a considerable short-term influence on Korea’s key macroeconomic variables, while its long-term effects are not significant. As a consequence of the COVID-19 pandemic, total demand in Korea has decreased. It is mostly reflected in the lower consumption and investment demand. Simultaneously, this has put increased pressure on inflation and unemployment. Moreover, the results also show that government investment expenditure and monetary policy may, to some degree, ameliorate the status of consumption demand. Meanwhile, they may alleviate employment pressures in order to boost output. In reality, both have some negative consequences. Based on the evidence presented in this article, the Korean government may implement appropriate policies to ensure the smooth functioning of the Korean macroeconomy.

Keywords: macroeconomic effects; COVID-19 pandemic; total output; consumption; investment; employment; inflation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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