Working Paper: CEPR ID: DP15892
Authors: Davide Furceri; Michael Ganslmeier; Jonathan D. Ostry; Naihan Yang
Abstract: While the COVID-19 pandemic is affecting all countries, output losses vary considerably across countries. We provide a first analysis of robust determinants of observed initial output losses using model-averaging techniques—Weighted Average Least Squares and Bayesian Model Averaging. The results suggest that countries that experienced larger output losses are those with lower GDP per capita, more stringent containment measures, higher deaths per capita, higher tourism dependence, more liberalized financial markets, higher pre-crisis growth, lower fiscal stimulus, higher ethnic and religious fractionalization and more democratic regimes. With respect to the first factor, lower resilience of poorer countries reflects the higher economic costs of containment measures and deaths in such countries and less effective fiscal and monetary policy stimulus.
Keywords: COVID-19; Recession; Resilience; WALS; BMA; Model Averaging
JEL Codes: E02; G01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| GDP per capita (O49) | output losses (D57) |
| stringent containment measures (H12) | output losses (D57) |
| deaths per capita (I12) | output losses (D57) |
| tourism dependence (Z30) | output losses (D57) |
| deaths per capita (I12) | stringent containment measures (H12) |