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Global macroeconomic scenarios of the COVID-19 pandemic

Author

Listed:
  • Warwick McKibbin
  • Roshen Fernando

Abstract

The COVID-19 global pandemic has caused significant global economic and social disruption. In McKibbin and Fernando (2020), we used data from historical pandemics to explore seven plausible scenarios of the economic consequences if COVID-19 were to become a global pandemic. In this paper, we use currently observed epidemiological outcomes across countries and recent data on sectoral shutdowns and economic shocks to estimate the likely impact of COVID-19 pandemic on the global economy in coming years under six new scenarios. The first scenario explores the outcomes if the current course of COVID-19 is successfully controlled, and there is only a mild recurrence in 2021. We then explore scenarios where the opening of economies results in recurrent outbreaks of various magnitudes and countries respond with and without economic shutdowns. We also explore the impact if no vaccine becomes available and the world must adapt to living with COVID-19 in coming decades. The final scenario is the case where a given country is in the most optimistic scenario (scenario 1), but the rest of the world is in the most pessimistic scenario. The scenarios in this paper demonstrate that even a contained outbreak (which is optimistic), will significantly impact the global economy in the coming years. The economic consequences of the COVID-19 pandemic under plausible scenarios are substantial and the ongoing economic adjustment is far from over.

Suggested Citation

  • Warwick McKibbin & Roshen Fernando, 2020. "Global macroeconomic scenarios of the COVID-19 pandemic," CAMA Working Papers 2020-62, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2020-62
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2020-06/62_2020_mckibbin_fernando_0.pdf
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    Cited by:

    1. Yugang He, 2022. "Home Production: Does It Matter for the Korean Macroeconomy during the COVID-19 Pandemic?," Mathematics, MDPI, vol. 10(12), pages 1-12, June.
    2. Eddy Bekkers & Robert B. Koopman, 2022. "Simulating the trade effects of the COVID‐19 pandemic: Scenario analysis based on quantitative trade modelling," The World Economy, Wiley Blackwell, vol. 45(2), pages 445-467, February.
    3. Ida Farida Adi Prawira, 2021. "Phenomenology of Employee Income Tax Policies during the Covid-19 in Indonesia," GATR Journals afr199, Global Academy of Training and Research (GATR) Enterprise.
    4. Wittwer, Glyn & Anderson, Kym, 2021. "COVID-19 and Global Beverage Markets: Implications for Wine," Journal of Wine Economics, Cambridge University Press, vol. 16(2), pages 117-130, May.
    5. Lie, Denny, 2021. "Implications of state-dependent pricing for DSGE model-based policy analysis in Indonesia," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 532-552.
    6. Jasper Verschuur & Elco Koks & Jim Hall, 2020. "The implications of large-scale containment policies on global maritime trade during the COVID-19 pandemic," Papers 2010.15907, arXiv.org, revised Nov 2020.
    7. Yixiao Zhou & Rod Tyers & Damian Lenzo, 2022. "Debt, Inflation and the Shape of the Global Pandemic Recovery," Economics Discussion / Working Papers 22-03, The University of Western Australia, Department of Economics.
    8. Emon Kalyan Chowdhury, 2022. "Disastrous consequence of coronavirus pandemic on the earning capacity of individuals: an emerging economy perspective," SN Business & Economics, Springer, vol. 2(10), pages 1-16, October.
    9. Glyn Wittwer & Kym Anderson, 2021. "COVID‐19’s impact on Australian wine markets and regions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 822-847, October.
    10. Allan Webster & Sangeeta Khorana & Francesco Pastore, 2021. "The labour market impact of COVID-19: early evidence for a sample of enterprises from Southern Europe," International Journal of Manpower, Emerald Group Publishing Limited, vol. 43(4), pages 1054-1082, November.
    11. Jiang, Tingfeng & Liu, Taoxiong & Tang, Ke & Zeng, Jiaqing, 2022. "Online prices and inflation during the nationwide COVID-19 quarantine period: Evidence from 107 Chinese websites," Finance Research Letters, Elsevier, vol. 49(C).
    12. Abba AHmed, Bello, 2020. "Impact of Covid-19 Pandemic on Global Economy," MPRA Paper 103753, University Library of Munich, Germany.
    13. Vaijanath Babshetti & Jyothi E. Singh & Prakash B. Yaragol, 2022. "The Impact of COVID-19 on the Socio-economic Indicators of the Selected Asian Countries," India Quarterly: A Journal of International Affairs, , vol. 78(1), pages 28-46, March.
    14. Mabugu, Ramos E. & Maisonnave, Helene & Henseler, Martin & Chitiga-Mabugu, Margaret & Makochekanwa, Albert, 2023. "Implications of COVID-19 and mitigation measures on gender and the Zimbabwean economy," Economic Modelling, Elsevier, vol. 121(C).
    15. McKibbin, Warwick & Fernando, Roshen, 2023. "The global economic impacts of the COVID-19 pandemic," Economic Modelling, Elsevier, vol. 129(C).
    16. Percy Mkhosi & Ismail Fasanya, 2022. "Revisiting Interest Rate – Exchange Rate Dynamics in South Africa: How Relevant is Pandemic Uncertainties?," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 69(3), pages 435-457, September.
    17. Bai, Chenjiang & Duan, Yuejiao & Fan, Xiaoyun & Tang, Shuai, 2023. "Financial market sentiment and stock return during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 54(C).

    More about this item

    Keywords

    Pandemics; infectious diseases; risk; macroeconomics; DSGE; CGE; G-Cubed;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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