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GDP effects of pandemics: a historical perspective

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  • Maciej Stefański

    (SGH Warsaw School of Economics)

Abstract

The paper estimates dynamic effects of pandemics on GDP per capita with local projections, controlling for the effects of wars and weather conditions, using a novel dataset that covers 33 countries and stretches back to the thirteenth century. On average, pandemics are found to have prolonged and highly statistically significant effects on GDP per capita—a pandemic killing 1% of the population tends to increase GDP per capita by approx. 0.3% after about 20 years. The study of a more detailed dataset available for the UK reveals that this results mainly from an increase in per capita land and a disproportionate impact of pandemics on low-productivity workers, while monetary expansion, institutional change and innovation could also play some role. At the same time, the effects of pandemics are found to vary with scale and across time and countries, with positive effects present following the Black Death and the Spanish flu pandemics, especially in Northern Europe. This suggests that only the largest and most unexpected pandemics have a positive impact on income.

Suggested Citation

  • Maciej Stefański, 2022. "GDP effects of pandemics: a historical perspective," Empirical Economics, Springer, vol. 63(6), pages 2949-2995, December.
    • Handle: RePEc:spr:empeco:v:63:y:2022:i:6:d:10.1007_s00181-022-02227-3
    DOI: 10.1007/s00181-022-02227-3
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    More about this item

    Keywords

    Pandemic; GDP; Local projection; Economic history; War; Tree rings;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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