Do Growth Expectations Match Up with Fiscal Bailout and Containment Measures in the Time of Covid-19?

Zdravković, Aleksandar (2020) Do Growth Expectations Match Up with Fiscal Bailout and Containment Measures in the Time of Covid-19? In: Black swan in the world economy 2020. Institut ekonomskih nauka, Beograd, pp. 106-120. ISBN 978-86-89465-54-9

Text 6.zdravkovic.pdf - Published Version Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (507kB)

Abstract

In this work, I run cross-country regression to estimate the impact of the expected fiscal bailout cost (in 2020) and effectiveness of the containment measures (applied in the first half of 2020) on the gap between economic growth forecasts prior and afterthe outbreak of COVID-19 pandemic (up to 2021). The estimation results confirm conjecture about the positive impact of expected bailout cost and negative impact of effectiveness in the implementation of containment measures on reduction of short-term growth gap, but not in the case of cumulative growth gap over the period 2020-2021. These results indicate that government fiscal spending in the future needs to be more focused on bottleneck sectors and activities that impede growth, as well as to be more supportive toward strengthening healthcare protection against COVID-19, especially when limited fiscal space and current expectations about slow economic recovery are taken into consideration.

Actions (login required)

View Item