The Macroeconomic Impact of the 1918–19 Influenza Pandemic in Sweden
Maksym Obrizan (),
Martin Karlsson and
MPRA Paper from University Library of Munich, Germany
What is the economic cost in the medium to long run of an epidemic that kills a large part of the labor force? To answer this question we build an overlapping generations model and calibrate it to the Swedish economy before the 1918–19 influenza pandemic. In the medium run the epidemic, which reduced the population by 0.66%, produces a modest increase in per capita consumption of survivors by 0.45%; however, the benefits are unevenly spread across cohorts. We also find that aggregate labor supply responds elastically while aggregate consumption and investment respond inelastically to the population decline. The aggregate consumption, for example, reduces by 0.27% only for each percentage point decrease in population over the following 10 years. Finally, we document that in the long run, the epidemic has a large cumulative effect over the following century.
Keywords: Epidemics; Overlapping Generations Models (search for similar items in EconPapers)
JEL-codes: E21 I15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dem, nep-dge, nep-his and nep-mac
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Working Paper: The Macroeconomic Impact of the 1918–19 Influenza Pandemic in Sweden (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:98910
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