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COVID-19 Vaccination and Financial Frictions

Cristina Arellano, Yan Bai and Gabriel Mihalache ()

No 632, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We study the COVID-19 epidemic in emerging markets that face financial frictions and its mitigation through social distancing and vaccination. We find that restricted vaccine availability in emerging markets, as captured by limited quantities and high prices, renders the pandemic exceptionally costly compared to economies without financial frictions. Improved access to financial markets enables better response to the delay in vaccine supplies, as it supports more stringent social distancing measures prior to wider vaccine availability. We show that financial assistance programs to such financially constrained countries can increase vaccinations and lower fatalities, at no present-value cost to the international community.

Keywords: Fiscal space; Vaccination; Financial market conditions; COVID-19 (search for similar items in EconPapers)
JEL-codes: F34 F41 I18 (search for similar items in EconPapers)
Date: 2021-12-15
New Economics Papers: this item is included in nep-dge and nep-his
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DOI: 10.21034/sr.632

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