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Initial conditions and cross-country macroeconomic impact during Covid-19

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  • Kuriakose, Francis

Abstract

The objective of this study is to analyse the correlation between initial conditions and cross-country macroeconomic impact of Covid-19 on OECD economies. The study uses group-wise multivariate linear regression modelling to examine the link between macroeconomic variables of interest and the duration of the pandemic, severity of its impact, and annual investment growth rate. The main result from the study shows that variables related to debt such as domestic credit to private sector, private sector debt and debt-to-GDP ratio had significant relationship with the duration and severity of the crisis as well as the investment growth rate during Covid-19. The original contribution of the study is in bringing out the correlation between initial conditions and first order effects of the pandemic on the economy. The policy implications of the results indicate short, medium and long-term measures required to mitigate the systematic risk posed by the pandemic.

Suggested Citation

  • Kuriakose, Francis, 2022. "Initial conditions and cross-country macroeconomic impact during Covid-19," MPRA Paper 115171, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115171
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    More about this item

    Keywords

    OECD; Covid-19; macroeconomic impact; economic growth; investment;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • 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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