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Modelling the Effects of a Health Shock on the Armenian Economy

Author

Listed:
  • Ani Asoyan

    (Monetary Policy Department, Central Bank of Armenia)

  • Vahagn Davtyan

    (Monetary Policy Department, Central Bank of Armenia)

  • Haykaz Igityan

    (Monetary Policy Department, Central Bank of Armenia)

  • Hasmik Kartashyan

    (Monetary Policy Department, Central Bank of Armenia)

  • Hovhannes Manukyan

    (Monetary Policy Department, Central Bank of Armenia)

Abstract

This paper extends the closed economy DSGE model in order to evaluate the impact of the coronavirus on the economy. Our model makes it clear that people's decisions to reduce consumption and working hours due to the health crisis lead to an economic recession. As a result, the spread of the virus declines. Expansionary monetary policy decreases the size of GDP decline, but it is costly in terms of public health. This result shows that there is a trade-off between the output loss caused by the pandemic and the health consequences of the pandemic.

Suggested Citation

  • Ani Asoyan & Vahagn Davtyan & Haykaz Igityan & Hasmik Kartashyan & Hovhannes Manukyan, 2020. "Modelling the Effects of a Health Shock on the Armenian Economy," Working Papers 15, Central Bank of the Republic of Armenia, revised Dec 2020.
    • Handle: RePEc:ara:wpaper:015
    as

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    File URL: https://rjmf.econs.online/en/2020/4/modelling-effects-health-shock-armenian-economy/
    File Function: First version, 2020
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    File URL: https://www.cba.am/EN/panalyticalmaterialsresearches/Health_shock.pdf
    File Function: Revised version, 2020
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    DSGE; health; epidemic; COVID-19;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • I10 - Health, Education, and Welfare - - Health - - - General

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