This paper studies whether containing COVID-19 pandemic by stringent strategies deteriorates or saves economic growth. Since there are country-specific factors that could affect both economic growth and COVID-19 infections and deaths, we first start with a cross-country analysis on identifying risk and protective factors on the COVID-19 infections and deaths using large across-country variation. Using data on 100 countries from 3 January to 27 November 2020 and taking into account the possibility of underreporting, we find that for both infections and deaths per million population, GDP per capita, population density, and income inequality are the three most important risk factors; government effectiveness, temperature and hospital beds are the three most important protective factors.
Second, inspired by the stochastic frontier literature, we construct a measure of pandemic containment effectiveness (PCE) and rank countries by their PCE scores for infections and deaths. Finally, by linking the PCE score with GDP growth data in Quarters 2 and 3 of 2020, we find that pandemic containment effectiveness is positively associated with economic growth in major economies. Countries with average PCE scores, such as Mexico, would gain more GDP growth by 3.85 percentage points if they could improve their PCE scores for infections to South Korea's level in Q2 of 2020. Therefore, there is no such trade-off between lives and livelihood facing by governments. Instead, to save economy, it is important to contain the pandemic first.
About the Speaker:
Mr Zhou Shihao is currently a third-year PhD student in Economics at the School of Social Sciences, Nanyang Technological University. His research interest lies in applied econometrics. He has also worked as an assistant trade analyst with Italian Trade Agency.
Meeting ID: 979 4438 2531
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