Country Performance during the Covid-19 Pandemic: Externalities, Coordination and the Role of Institutions

The Covid-19 pandemic is one of the most powerful examples of negative externalities across the globe. We focus on the role played by institutions at the country level in fighting the spread of Covid-19 by making policy coordination more difficult or, on the contrary, more effective. Specifically, we consider the type of political regimes, political fragmentation and decentralization settings. We use the most recently available information on Covid-19 performance for up to 115 countries around the world. Our main results show that having either democracies or autocracies does not represent a crucial issue for successfully addressing the pandemic. Most significantly, countries with centralized political parties, which fundamentally allow for better coordination at the national level, perform significantly better than those with decentralized ones. However, the assignment of policy responsibilities to sub-national governments is an impediment in fighting the Covid-19 emergency.