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The Impact of COVID-19 Shocks on Business and GDP of Global Economy

Author

Listed:
  • Gharoie Ahangar, Reza

    (Lewis University)

  • Kim, Myungsup

    (University of North Texas)

Abstract

This study examines the relationship between COVID-19 shocks and GDP loss of different countries worldwide based on the seven scenarios of the epidemiological DSGE/CGE model of [McKibbin, W., & Fernando, R. (2020). The Global Macroeconomic Impacts of COVID-19: Seven Scenarios. Asian Economic Papers, 20(2): 1-30, MIT Press]. We implemented a panel data approach for 24 cross-sectional units with three periods and a general regression neural network. The economic and financial shocks consist of labor supply, equity risk premium, consumption demand, and government expenditure. The findings show that the consumption demand and equity risk premium shocks on GDP are more influential than the other shocks. Moreover, the results reveal that the most significant GDP loss is associated with Japan, Germany, and the US, respectively, which are industrialized countries with the most prominent automobile manufacturers. The lowest GDP loss is linked to Saudi Arabia, one of the world's biggest oil producer countries.

Suggested Citation

  • Gharoie Ahangar, Reza & Kim, Myungsup, 2022. "The Impact of COVID-19 Shocks on Business and GDP of Global Economy," American Business Review, Pompea College of Business, University of New Haven, vol. 25(2), pages 328-354, November.
    • Handle: RePEc:ris:ambsrv:0060
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    File URL: https://digitalcommons.newhaven.edu/americanbusinessreview/vol25/iss2/5/
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    More about this item

    Keywords

    COVID-19; Economic Shocks; GDP Loss; Global Business;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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