0000000000415933
AUTHOR
Jonathan Ostry
Will the Economic Impact of COVID-19 Persist? Prognosis from 21st Century Pandemics
COVID-19 has had a disruptive economic impact in 2020, but how long its impact will persist remains unclear. We offer a prognosis based on an analysis of the effects of five previous major epidemics in this century. We find that these pandemics led to significant and persistent reductions in disposable income, along with increases in unemployment, income inequality and public debt-to-GDP ratios. Energy use and CO2 emissions dropped, but mostly because of the persistent decline in the level of economic activity rather than structural changes in the energy sector. Applying our empirical estimates to project the impact of COVID-19, we foresee significant scarring in economic performance and in…
Are climate change policies politically costly?
Are policies designed to avert climate change (Climate Change Policies, or CCPs) politically costly? Using data on governmental popular support and the OECD's Environmental Stringency Index covering 30 countries between 2001 and 2015, our results show that CCPs are not necessarily politically costly: policy design matters. First, in contrast to non-market-based CCPs (such as emission limits), only market-based CCPs (such as emission taxes) entail political costs for the government. Second, the effects are only present when CCPs are adopted during periods of high oil prices, prior to elections, or in countries depending strongly on non-green (dirty) energy sources. Third, CCPs are only polit…
Will COVID-19 Have Long-Lasting Effects on Inequality? Evidence from Past Pandemics
This paper provides evidence on the impact of major epidemics from the past two decades on income distribution. The pandemics in our sample, even though much smaller in scale than COVID-19, have led to increases in the Gini coefficient, raised the income share of higher-income deciles, and lowered the employment-to-population ratio for those with basic education compared to those with higher education. We provide some evidence that the distributional consequences from the current pandemic may be larger than those flowing from the historical pandemics in our sample, and larger than those following typical recessions and financial crises.