Is the COVID-19 Pandemic a Supply or a Demand Shock?

Brinca, Pedro; Duarte, João B.; Faria-e-Castro, Miguel

doi:10.20955/es.2020.31

Cited by 62 publications

(50 citation statements)

References 1 publication

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“…The intellectuals would come to a consensus with us that the global spread of corona pandemic has recently created spirals of systematic risks across markets in Asia. And, we can cite the role of supply, demand and financial shocks for such occurrences (Brinca et al, 2020). In order to control the adverse effects of these shocks, governments have responded with the conventional expansionary fiscal and monetary weapons along with other policy responses to protect their economies from plausible recessions.…”

Section: Methodsmentioning

confidence: 99%

Corona Pandemic and Stock Market Behaviour: Empirical Insights from Selected Asian Countries

Mishra

2020

Millennial Asia

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On the onset of the year 2020, the unprecedented outbreak of novel coronavirus, initially as a human health epidemic and later as a global pandemic, has wobbled the economies of affected countries across the globe. The consequential unexpected occurrences of supply- and demand-side shocks forced the economies to trim down their growth prospects. The interplay of these shocks has generated spirals of downturns in all major economic sectors, including the financial sector in affected countries. Specifically, the stock markets immediately nosedived, following the outbreak of the global spread of coronavirus disease 2019 (COVID-19). Thus, we examine the behaviour of the selected Asian stock markets amid the huge uncertainties of the corona pandemic and find the occurrences of volatility clustering in these markets. Such volatility clustering primarily occurred, owing to the pessimistic and panic sentiments of investors, and the increase in the number of COVID-19 confirmed cases, changes in oil prices, and exchange rates were found to be significant in channelizing the fears and uncertainties of coronavirus pandemic to cause unexpected nosedives in Asian stock markets.

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Section: Methodsmentioning

confidence: 99%

Corona Pandemic and Stock Market Behaviour: Empirical Insights from Selected Asian Countries

Mishra

2020

Millennial Asia

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“…The result is a macro economic crisis comprised of simultaneous demand, supply, and financial shocks. Consumers are traveling less and purchasing fewer goods and services that bring them into close contact with others, global supply chains are disrupted, and financial service systems are facing liquidity strains (Brinca, Duarte, & e Castro, 2020;Triggs & Kharas, 2020).…”

Section: Introductionmentioning

confidence: 99%

Income Loss and Financial Distress during COVID-19: The Protective Role of Liquid Assets

Roll

Despard

2020

SSRN Journal

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Nearly a quarter of U.S. households have experienced job or income losses related to the COVID-19 pandemic. Liquid assets mitigate financial distress in the face of financial shocks such as job loss, yet this relationship in the midst of the COVID-19 pandemic is unknown. Using a nationally representative sample of U.S. households (N = 4,383) who completed a survey in the early days of the pandemic, we examined pre-pandemic liquid assets as a moderator of the relationship between job and income loss and difficulty meeting financial obligations and use of high-cost financial resources. Estimates from propensity score-weighted linear probability models indicated that greater liquid assets lessened the probability of experiencing all eight measures of financial distress and most measures of distress among households experiencing job or income losses. Policy efforts to help households build emergency savings can help households better prepare for future pandemics while also supporting public health responses.

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“…Economists may diverge in their views on how to best assess the COVID-19 variable, but many agree that it can be regarded as a hybrid supply-demand shock generating domino effect. Brinca, Duarte, and Faria-e-Castro explain this duplicity as a logical consequence of the spill-over effect [47]. They argue that at the supply end, the lockdown policy cost the working population their income and savings, causing them to initiate demand shock when they were forced to restrain from all non-essential purchases.…”

Section: Covid-19 As a Demand Shockmentioning

confidence: 99%

“…Although with high relevance, supply shock advocates draw conclusions less from evidence and more on inferences. Some of the more robust research evidence examining the supply shock was generated using econometric models [47]. On a more moderate note, Candia et al found that, as opposed to households that ultimately experience it as a supply disruption, only some companies perceive the crisis as a supply shock [60].…”

Section: Covid-19 As a Demand Shockmentioning

confidence: 99%

Sustaining Trade during COVID-19 Pandemic: Establishing a Conceptual Model Including COVID-19 Impact

2021

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The conceptual research aims to identify antecedents conducive to bilateral trade during the COVID-19 pandemic. Considering the relevance of bilateral trade for foreign policy and economy studies, there is a need for a renewed framework in times of extreme economic instability. As international commerce is essential for improving the country’s economy, we have examined how economic distance, population, trade percentage of GDP, exchange rate, and political changes interconnect and relate to COVID-19, influencing trade flows. This conceptual paper illustrates the likely impact of COVID-19 on international trade by exploring pandemics’ effects on standard trading parameters such as GDP, distance, policy stability, and population. We model the resulting shock as a multifaceted variable reflected in capital underutilization, manufacturing output decline, international trade costs inflation, production costs inflation, decrease in demand for certain services and shift from everyday needs towards activities that exclude the proximity between people, e.g., proclivity towards virtual market products. The sudden decrease in GDP and bilateral trade, as well as FDI, is amplified by further development of pandemics’ long-term consequences. We take COVID-19 to be a technological, financial, and policy shock significantly influencing international trade and economic development and argue that it will have a varying impact on diverse sectors and economies. The paper offers preliminary insight into the pandemic-related economics that are unfolding and deduce recommendations on positive changes in trading policy to fully leverage on arising trading opportunities and point to potential research directions.

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Is the COVID-19 Pandemic a Supply or a Demand Shock?

Cited by 62 publications

References 1 publication

Corona Pandemic and Stock Market Behaviour: Empirical Insights from Selected Asian Countries

Corona Pandemic and Stock Market Behaviour: Empirical Insights from Selected Asian Countries

Income Loss and Financial Distress during COVID-19: The Protective Role of Liquid Assets

Sustaining Trade during COVID-19 Pandemic: Establishing a Conceptual Model Including COVID-19 Impact

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