Income Convergence or Divergence in the Aftermath of the COVID-19 Shock?

Mariya Brussevich, Shihui Liu and Chris Papageorgiou ()

No 2022/121, IMF Working Papers from International Monetary Fund

Abstract: The paper extends the work of Deaton (2021) by exploring the period of post-crisis recovery in 2021-2024. The paper documents per-capita income divergence during the period of post-shock recovery, with countries at the bottom of the income distribution falling significantly behind. Findings suggest that higher COVID-19 vaccination rates and targeted virus containment measures are associated with faster recovery in per-capita incomes in the medium term. Evidence on the effectiveness of economic support policies for reducing cross-country income inequality, including fiscal and monetary policies, is mixed especially in the case of developing countries.

Keywords: COVID-19; convergence; divergence; support policies; income convergence; convergence coefficient; vaccination rate; health impact; targeted virus containment measure; Income; Income inequality; Service exports; Global (search for similar items in EconPapers)
Pages: 37
Date: 2022-06-17
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2022/121

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