A theory of fiscal policy response to an epidemic

Pang, Yu

doi:10.1002/hec.4564

Cited by 3 publications

(2 citation statements)

References 58 publications

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“…Policy interventions to maintain economic growth are therefore preferable. During GHEs, governments must coordinate their efforts to manage working time arrangements and determine the optimal level of public debt based on production technology and disease characteristics to effectively implement fiscal policy [ 69 ]. Simultaneously, medium- and long-term structural policies must be launched while establishing epidemic risk assessment tools.…”

Section: Discussionmentioning

confidence: 99%

From isolation to revival: trade recovery amid global health crises

Yang

2024

Global Health

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Background The COVID-19 pandemic has highlighted the importance of designing effective trade recovery measures in response to global health events (GHEs). This study combines international trade risk management theory and multi-case comparative analysis of past GHEs to present a theoretical framework for designing national trade recovery measures for future events. Results The research finds that during GHEs, trade risks shift to fundamental uncertainty, requiring spatial–temporal-subject dimension recovery measures. The study suggests changing the focus of trade recovery policy design from emergency-oriented and single-dimension measures to reserve-oriented and enduring-effect measures of comprehensive dimensions at micro- and macroeconomic levels. Conclusion The study contributes to the debate on managing trade risks in times of crisis, where there is a need to develop effective trade recovery measures that account for the complexities of global trade and the unique challenges of GHEs. The findings provide practical guidance for trade officials and policymakers to design measures in response to GHEs to improve a country’s overall trade recovery.

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Section: Discussionmentioning

confidence: 99%

From isolation to revival: trade recovery amid global health crises

Yang

2024

Global Health

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“…Kocherlakota (2022) finds that fiscal policy helps to achieve macroeconomic stabilization better in a model with public debt bubble. Pang (2022) examined the optimal fiscal policy for improved social welfare, following the COVID-19 pandemic. The authors found that the optimal fiscal response is contingent on production technology and the severity and transmissibility of the pandemic.…”

Section: Empirical Literaturementioning

confidence: 99%

Mitigating the impact of a pandemic: a time-varying-parameter structural VAR (TVP-SVAR) and time-varying granger causality estimations

Olaoye,

Zerihun

2023

AJEMS

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PurposeThe study investigates the effectiveness of government policies to mitigate the impact of a pandemic. The study adopts the small open economy of Nigeria for the following reasons. First, Nigeria is the largest economy in SSA. Second, Nigeria was also significantly impacted by the COVID-19 pandemic.Design/methodology/approachThe study employed the time-varying structural autoregressive (TVSVAR) model to control for the potential asymmetry in fiscal variables and to control for the shift in the structural shift, following a macroeconomic shock. As a form of robustness, the study also implements the time-varying Granger causality to formally assess the temporal instability of the variable of interest.FindingsThe results show that an oil price shock is an important source of macroeconomic instability in Nigeria. Importantly, the results indicate that the effects of fiscal policy are strongly time varying. Specifically, the results show that fiscal policy helps to stabilize the economy, (i.e. they help to reduce inflation and spur output growth) following macroeconomic shock. Further, the Granger test shows that fiscal policy helped to spur growth in Nigeria. The research and policy implications are discussed.Originality/valueThe study accounts for the time-varying effects of fiscal policy.

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A theory of fiscal policy response to an epidemic

Pang

2022

Health Economics

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Governments worldwide have issued massive amounts of debt to inject fiscal stimulus during the COVID‐19 pandemic. This paper analyzes fiscal responses to an epidemic, in which interactions at work increase the risk of disease and mortality. Fiscal policies, which are designed to borrow against the future and provide transfers to individuals suffering economic hardship, can facilitate consumption smoothing while reduce hours worked and hence mitigate infections. We examine the optimal fiscal policy and characterize the condition under which fiscal policy improves social welfare. We then extend the model analyzing the static and dynamic pecuniary externalities under scale economies—the decrease in labor supply during the epidemic lowers the contemporaneous average wage rate while enhances the post‐epidemic workforce health and productivity. We suggest that fiscal policy may not work effectively unless the government coordinates working time, and the optimal size of public debt is affected by production technology and disease severity and transmissibility.

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A theory of fiscal policy response to an epidemic

Cited by 3 publications

References 58 publications

From isolation to revival: trade recovery amid global health crises

From isolation to revival: trade recovery amid global health crises

Mitigating the impact of a pandemic: a time-varying-parameter structural VAR (TVP-SVAR) and time-varying granger causality estimations

A theory of fiscal policy response to an epidemic

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