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Global Macroeconomic Consequences of Pandemic Influenza

Author

Listed:
  • Warwick McKibbin
  • Alexandra Sidorenko

Abstract

This paper explores the implications of a pandemic influenza outbreak on the global economy through a range of scenarios (mild, moderate, severe and ultra) that span the historical experience of influenza pandemics of the twentieth century. An influenza pandemic would be expected to lead to: a fall in the labour force to different degrees in different countries due to a rise in mortality and illness; an increase in the cost of doing business; a shift in consumer preferences away from exposed sectors; and a re-evaluation of country risk as investors observe the responses of governments. The paper finds that even a mild pandemic has significant consequences for global economic output. The mild scenario is estimated to cost the world 1.4 million lives and close to 0.8% of GDP (approximately $U330 billion) in lost economic output. As the scale of the pandemic increases, so do the economic costs. A massive global economic slowdown occurs in the “ultra” scenario with over 142.2 million people killed and a GDP loss of $US4.4 trillion. The composition of the slowdown differs sharply across countries with a major shift of global capital from the affected economies to the less affected safe haven economies of North America and Europe.

Suggested Citation

  • Warwick McKibbin & Alexandra Sidorenko, 2006. "Global Macroeconomic Consequences of Pandemic Influenza," CAMA Working Papers 2006-26, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2006-26
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2017-02/26_mckibbin_sidorenko_2006.pdf
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    Cited by:

    1. George Verikios & Maura Sullivan & Pane Stojanovski & James Giesecke & Gordon Woo, 2016. "Assessing Regional Risks From Pandemic Influenza: A Scenario Analysis," The World Economy, Wiley Blackwell, vol. 39(8), pages 1225-1255, August.
    2. Lars Jonung & Werner Roeger, 2006. "The macroeconomic effects of a pandemic in Europe - A model-based assessment," European Economy - Economic Papers 2008 - 2015 251, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Verikios, George & Dixon, Peter B. & Rimmer, Maureen T. & Harris, Anthony H., 2015. "Improving health in an advanced economy: An economywide analysis for Australia," Economic Modelling, Elsevier, vol. 46(C), pages 250-261.
    4. Peter B. Dixon & Bumsoo Lee & Todd Muehlenbeck & Maureen T. Rimmer & Adam Z. Rose & George Verikios, 2010. "Effects on the U.S. of an H1N1 epidemic: analysis with a quarterly CGE model," Centre of Policy Studies/IMPACT Centre Working Papers g-202, Victoria University, Centre of Policy Studies/IMPACT Centre.
    5. Nigmatulina, Karima R. & Larson, Richard C., 2009. "Living with influenza: Impacts of government imposed and voluntarily selected interventions," European Journal of Operational Research, Elsevier, vol. 195(2), pages 613-627, June.
    6. Llanto, Gilberto M., 2016. "Risks, Shocks, Building Resilience: Philippines," Research Paper Series DP 2016-09, Philippine Institute for Development Studies.
    7. Rodríguez, U-Primo E. & Garcia, Yolanda T. & Garcia, Arnulfo G. & Tan, Reynaldo L., 2. "Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 4(2).
    8. Ahmed,Syud Amer & Baris,Enis & Go,Delfin Sia & Lofgren,Hans & Osorio-Rodarte,Israel & Thierfelder,Karen E. & Ahmed,Syud Amer & Baris,Enis & Go,Delfin Sia & Lofgren,Hans & Osorio-Rodarte,Israel & Thier, 2017. "Assessing the global economic and poverty effects of antimicrobial resistance," Policy Research Working Paper Series 8133, The World Bank.
    9. Joseph H. Cook, 2013. "Principles and standards for benefit–cost analysis of public health preparedness and pandemic mitigation programs," Chapters,in: Principles and Standards for Benefit–Cost Analysis, chapter 3, pages 110-152 Edward Elgar Publishing.
    10. Marcus R. Keogh-Brown & Simon Wren-Lewis & W. John Edmunds & Philippe Beutels & Richard D. Smith, 2010. "The possible macroeconomic impact on the UK of an influenza pandemic," Health Economics, John Wiley & Sons, Ltd., vol. 19(11), pages 1345-1360.
    11. Brahmbhatt, Milan & Dutta, Arindam, 2008. "On SARS type economic effects during infectious disease outbreaks," Policy Research Working Paper Series 4466, The World Bank.
    12. repec:taf:rjapxx:v:17:y:2012:i:1:p:22-51 is not listed on IDEAS
    13. repec:hrv:hksfac:35014363 is not listed on IDEAS
    14. Boisvert, Richard N. & Kay, David & Turvey, Calum G., 2012. "Macroeconomic costs to large scale disruptions of food production: The case of foot- and-mouth disease in the United States," Economic Modelling, Elsevier, vol. 29(5), pages 1921-1930.
    15. McKibbin, Warwick J. & Wilcoxen, Peter J., 2013. "A Global Approach to Energy and the Environment," Handbook of Computable General Equilibrium Modeling, Elsevier.
    16. Llanto, Gilberto M., 2016. "Risks, Shocks, Building Resilience: Philippines," Discussion Papers DP 2016-09, Philippine Institute for Development Studies.
    17. Smith, Richard D. & Keogh-Brown, Marcus R. & Barnett, Tony, 2011. "Estimating the economic impact of pandemic influenza: An application of the computable general equilibrium model to the UK," Social Science & Medicine, Elsevier, vol. 73(2), pages 235-244, July.
    18. Robert H. Beach & Christine Poulos & Subhrendu K. Pattanayak, 2007. "Farm Economics of Bird Flu," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 55(4), pages 471-483, December.

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