Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures

Amr Hosny and Kevin Pallara

No 2022/012, IMF Working Papers from International Monetary Fund

Abstract: This paper argues that the type of COVID-19 containment measures affects the trade-offs between infection cases, economic activity and sovereign risk. Using local projection methods and a year and a half of high-frequency daily data covering 44 advanced and emerging economies, we find that smart (e.g. testing) as opposed to physical (e.g. lockdown) measures appear to be best placed to tackle these trade-offs. Initial conditions also matter whereby containment measures can be less disruptive when public health response time is fast and public debt is low. We also construct a database of daily fiscal announcements for Euro area countries, and find that sovereign risk is improved under a combination of large support packages and smart measures.

Keywords: COVID-19; fiscal measures; containment measures; fiscal space; sovereign risk.; containment measure; IMF working papers; public health response time; types of COVID-19 containment; CDS spread; infection case; Fiscal space; Credit default swap; COVID-19; Western Hemisphere; Global; Europe (search for similar items in EconPapers)
Pages: 49
Date: 2022-01-28
New Economics Papers: this item is included in nep-hea and nep-mac
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Journal Article: Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures (2023)
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