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The Macroeconomic Impact of the 1918–19 Influenza Pandemic in Sweden

Author

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  • Karlsson Martin

    (CINCH, University of Duisburg-Essen, Weststadttürme Berliner Platz 6-8, Essen, DE 45127, Germany)

  • Matvieiev Mykhailo

    (Aix-Marseille School of Economics, 5-9 Bd Maurice Bourdet, 13001, Marseille, France)

  • Obrizan Maksym

    (Kyiv School of Economics, Shpaka Str 3, Kyiv, 03113, Ukraine)

Abstract

In this paper, we develop an overlapping generations model with endogenous fertility and calibrate it to the Swedish historical data in order to estimate the economic cost of the 1918–19 influenza pandemic. The model identifies survivors from younger cohorts as main benefactors of the windfall bequests following the influenza mortality shock. We also show that the general equilibrium effects of the pandemic reveal themselves over the wage channel rather than the interest rate, fertility or labor supply channels. Finally, we demonstrate that the influenza mortality shock becomes persistent, driving the aggregate variables to lower steady states which costs the economy 1.819% of the output loss over the next century.

Suggested Citation

  • Karlsson Martin & Matvieiev Mykhailo & Obrizan Maksym, 2023. "The Macroeconomic Impact of the 1918–19 Influenza Pandemic in Sweden," The B.E. Journal of Macroeconomics, De Gruyter, vol. 23(2), pages 637-675, June.
    • Handle: RePEc:bpj:bejmac:v:23:y:2023:i:2:p:637-675:n:2
    DOI: 10.1515/bejm-2021-0018
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    More about this item

    Keywords

    epidemics; overlapping generations models; 1918–19 influenza; endogenous fertility;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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