The Scarring and Hysteresis Effects of Steep Recessions and the Implications for Fiscal Policy in ECA Transition Emdes

Brownbridge, Martin; Canagarajah, Sudharshan

doi:10.1596/1813-9450-9682

Cited by 3 publications

(3 citation statements)

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“…The Keynesian Tourism destination competitiveness in Kenya effect as well as the scarring and hysteresis effects of public debt has shown that fiscal policies are key towards mitigating the effects of unemployment due to financial crises (Dombi and Dedak, 2019). The World Bank reports on the scarring and hysteresis effects of steep recessions have shown that fiscal policies during the great recession caused by the COVID-19 pandemic and subsequent impacts on 65 middle income countries has had a significant impact on productivity losses (World Bank, 2021). Several studies have evidenced the positive effects of fiscal policy on the level and rate of endogenous economic growth (Easterly and Robelo, 1993;Kopits and Symansky, 1998).…”

Section: Literature Review and Theoretical Implicationsmentioning

confidence: 99%

A Markov regime-switching (MS) approach to modeling the effects of fiscal policies and COVID-19 pandemic on tourism destination competitiveness in Kenya

Kinuthia

Maingi

2022

JHTI

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PurposeThe COVID-19 pandemic has had a catastrophic impact on the tourist activity in Kenya. Global lockdown has limited travel resulting to losses in the tourism sector. This paper discusses the specific role that fiscal policy plays to improve tourism competitiveness in Kenya. Specifically, the study examines how Kenyan government can revive the tourism economy to improve its competitiveness.Design/methodology/approachA tourism demand model to explore relationship between fiscal policies and inbound tourism in Kenya is developed. This study uses a Markov regime-switching (MS) regression model to establish the relationships that exist between COVID-19 pandemic, fiscal policies and tourism revenue in Kenya.FindingsThe estimation results of the Markov-switching dynamic regression showed that the coefficients of international tourists arrivals, domestic bed occupancy and international bed occupancy are positive and significant with p-values of 0.000 during the pandemic period. The findings show that the transitioning periods during the fiscal policy shifts had an effect on the international arrivals. Therefore, fiscal incentives were key in influencing tourism arrivals and bednights occupancies.Research limitations/implicationsThe theoretical implications show that to promote the state of high international and domestic tourist arrivals, the government should encourage more fiscal spending initiatives that encourage the increase in tourist arrivals and occupancies such as vaccinations against COVID-19 and promoting safe spaces for visitors within the destination is key towards reviving the sector. In order to curb the hysteresis effects of COVID-19 related depression and resultant impacts on GDP, there is a need to review the national fiscal policies and target fiscal policies on the cyclical effects of the COVID-19 impacts on international tourism market.Originality/valueThis research develops an economic model that builds accurate relationships between fiscal policies, pandemics and tourism destination competitiveness as a means of informing competitive tourism management strategies and governance.

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Section: Literature Review and Theoretical Implicationsmentioning

confidence: 99%

A Markov regime-switching (MS) approach to modeling the effects of fiscal policies and COVID-19 pandemic on tourism destination competitiveness in Kenya

Kinuthia

Maingi

2022

JHTI

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“…The interconnectedness of markets suggests that hysteresis or scarring in the labour market can spill over to hysteresis in output and productivity (Arulampalam et al, 2001;Bell et al, 2020;Brownbridge & Canagarajah, 2021). Yet even without any spillover effects, as mentioned above by Cerra et al (2021), the second channel through which economic hysteresis can manifest itself is through a reduction in production and economic growth, halt of investments in general, and particularly in R&D, as companies may delay or reduce spending on R&D (Irons, 2009).…”

Section: Introductionmentioning

confidence: 99%

Is there any ‘new normal’? Economics of the turmoil

2024

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With the outbreak of the COVID-19 pandemic, the world came to a standstill. Scholars and policymakers dealing with the economic consequences of the pandemic quickly realised that returning to the pre-pandemic state was impossible—the global community had been heading toward a “new normal”. Unfortunately, before we could recognise and tame the “new normal” for good, it was disrupted by the Russian invasion of Ukraine and subsequent energy crises. Therefore, in the monograph’s title, we question whether any “new normal” exists. However, disruptions and shocks are unimaginable to get used to; as researchers, we believe knowledge becomes particularly valuable in such circumstances. Defining, studying and describing turmoils allow, if only to some extent, to control the damages they cause. Hence, the research presented in this book aims to identify and explore challenges at the supranational and national levels. Focusing on those challenges, we got to investigate the multidimensional impact of the pandemic shock on business reality. In doing that, we hoped to collect a valuable foundation for formulating a resilience policy, which, to be effective, must respect the peculiarity of national economies, industries, firms, and individual consumers.

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Section: Introductionmentioning

confidence: 99%

The COVID-19 pandemic in the disaster and economic discourses

Palzur

2024

Is There Any ‘New Normal’? Economics of the Turmoil

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Purpose: The chapter aims to compare how the disciplines of economics and disaster research use terminology related to the long-term impacts of disasters and crises and particularly to discuss the overlaps in the use of the concepts “economic scarring” and hysteresis from the economics literature with the concepts of resilience, “bouncing back” or “bouncing forward” from the disaster discourse. Design/methodology/approach: By using a comparative literature review, the chapter compares the terms used in the economic literature with those used in the disaster literature and applies these concepts to the context of the COVID-19 pandemic, considering it a global disaster with significant economic implications. Findings: While earlier literature showed similarities in the use of the terms hysteresis, scarring, resilience, and bouncing back, a comparison of COVID-19 studies reveals divergences in operational definitions. The economic discourse still uses single indicators like GDP, output or unemployment to measure economic scarring and hysteresis, while the disaster discourse utilises more often multi-indicator operational definitions or indices, which demonstrate the multi-dimensional characteristics of the concept of resilience. Originality and value: This chapter seeks to identify potential differences in how two disciplines approach the study of disasters, crises, or shocks and aims to foster interdisciplinary dialogue and understanding. The chapter provides a resource for scholars in disaster and crisis research, helping to frame the concepts and relevant literature into groupings and assists a better selection of concepts for research in the field.

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The Scarring and Hysteresis Effects of Steep Recessions and the Implications for Fiscal Policy in ECA Transition Emdes

Cited by 3 publications

References 32 publications

A Markov regime-switching (MS) approach to modeling the effects of fiscal policies and COVID-19 pandemic on tourism destination competitiveness in Kenya

A Markov regime-switching (MS) approach to modeling the effects of fiscal policies and COVID-19 pandemic on tourism destination competitiveness in Kenya

Is there any ‘new normal’? Economics of the turmoil

The COVID-19 pandemic in the disaster and economic discourses

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