A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest

October 16, 2020

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Format: Chicago

Tahsin Saadi Sedik, and Rui Xu. A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest, (USA: International Monetary Fund, 2020) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In this paper we analyze the dynamics among past major pandemics, economic growth, inequality, and social unrest. We provide evidence that past major pandemics, even though much smaller in scale than COVID-19, have led to a significant increase in social unrest by reducing output and increasing inequality. We also find that higher social unrest, in turn, is associated with lower ourput and higher inequality, pointing to a vicious cycle. Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come.

Subject: Communicable diseases, COVID-19, Econometric analysis, Health, Income distribution, Income inequality, National accounts, Personal income, Vector autoregression

Keywords: Communicable diseases, Covid-19, Disorder score, Global, Income inequality, Inequality, Net Gini coefficient, Pandemic dummy, Pandemic event, Pandemics, Panel VAR model, Panel vector autoregressions, Social Unrest, Vector autoregression, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/216
Stock No:

WPIEA2020216
ISBN:

9781513559162
ISSN:

1018-5941

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