Covid-19 fiscal support and its effectiveness
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Peer-reviewed
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Abstract
This paper uses a threshold-augmented Global VAR model to quantify the macroeconomic effects of countries' discretionary fiscal actions in response to the Covid-19 pandemic and its fallout. Our results are threefold: (1) fiscal policy is playing a key role in mitigating the effects of the pandemic; (2) all else equal, countries that implemented larger fiscal support are expected to experience less output contractions; (3) emerging markets are also benefiting from the synchronized fiscal actions globally through the spillover channel and reduced financial market volatility.
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Keywords
Covid-19, Fiscal policy, TGVAR, Threshold effects
Journal Title
Economics Letters
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Journal ISSN
0165-1765
1873-7374
1873-7374
Volume Title
205
Publisher
Elsevier