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Pandemic Panic? Effects of Health System Capacity on Firm Confidence During COVID-19

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  • Gopalakrishnan, Balagopal
  • Lim, Jamus Jerome
  • Mohapatra, Sanket

Abstract

In this study, we examine the impact of health system capacity and government responses on firms’ business confidence in response to the COVID-19 pandemic. Using a sample of firm-level data from 53 countries, we find that ex ante proactive measures—such as health spending by the public and private sectors and availability of medical staff—have a favorable impact on the firms’ perceptions of risk and sentiment. This effect reduces as the number of COVID-19 cases rise, possibly as a result of the drain on a country’s health resources. We also find that the ex post reactive measures—such as health and containment actions, and the overall quality of government response—also play a role in bolstering business confidence. These effects vary by firm size and the level of development of the economy, and are largely impervious to prior epidemic experience.

Suggested Citation

  • Gopalakrishnan, Balagopal & Lim, Jamus Jerome & Mohapatra, Sanket, 2021. "Pandemic Panic? Effects of Health System Capacity on Firm Confidence During COVID-19," IIMA Working Papers WP 2021-07-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:14656
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    1. Sanjay Basu & Jason Andrews & Sandeep Kishore & Rajesh Panjabi & David Stuckler, 2012. "Comparative Performance of Private and Public Healthcare Systems in Low- and Middle-Income Countries: A Systematic Review," PLOS Medicine, Public Library of Science, vol. 9(6), pages 1-14, June.
    2. James E. Neumann & Jacqueline Willwerth & Jeremy Martinich & James McFarland & Marcus C. Sarofim & Gary Yohe, 2020. "Climate Damage Functions for Estimating the Economic Impacts of Climate Change in the United States," Review of Environmental Economics and Policy, University of Chicago Press, vol. 14(1), pages 25-43.
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