The Effects of Fiscal Measures During COVID-19

By Pragyan Deb, Davide Furceri, Jonathan David Ostry, Nour Tawk, Naihan Yang

November 5, 2021

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Pragyan Deb, Davide Furceri, Jonathan David Ostry, Nour Tawk, and Naihan Yang. The Effects of Fiscal Measures During COVID-19, (USA: International Monetary Fund, 2021) accessed December 22, 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

This paper empirically examines the effects of fiscal policy measures during the COVID-19 pandemic, using a novel database of daily fiscal policy announcements—classified by type of fiscal measure—and high-frequency economic indicators for 52 countries from January 1 to December 31, 2020. The results suggest that fiscal policy announcements have been effective in stimulating economic activity, boosting confidence, and reducing unemployment, but their effect varies by type of measure and country characteristics. Emergency lifeline measures (which form the bulk of below-the-line measures) are more effective when containment policies are stringent, providing cashflow support to firms and households. Demand-support measures (which comprise most of above-the-line measures) are more effective when containment measures are relaxed.

Subject: COVID-19, Fiscal policy, Fiscal stimulus, Health, Industrial production, Labor, Production, Unemployment rate

Keywords: Containment policy, COVID-19, Demand-support measure, Emergency lifeline, Fiscal policy, Fiscal policy announcement, Fiscal stimulus, Global, High-frequency data., Industrial production, Industrial production, Multipliers, Unemployment rate

Publication Details

Pages:

65
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/262
Stock No:

WPIEA2021262
ISBN:

9781557754264
ISSN:

1018-5941

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