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Business Cycle and Health Dynamics during the COVID-19 Pandemic: A Scandinavian Perspective

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  • Hilde C. Bjornland
  • Malin C. Jensen
  • Leif Anders Thorsrud

Abstract

We use a unique measure of daily economic activity and manually audited non-pharmaceutical intervention indexes for Norway and Sweden to model the dynamics between COVID-19, policy, health, and business cycles within a SVAR framework. Our analysis documents large measurement errors in commonly used containment policy measures, significant endogeneity between the model’s variables, and a strong health-economy trade-off following both policy shocks and precautionary actions. We further document that a large share of the variation in containment policies is driven by news innovations and quantify via counterfactual simulations the output cost per life saved from following stricter versus softer policies.

Suggested Citation

  • Hilde C. Bjornland & Malin C. Jensen & Leif Anders Thorsrud, 2024. "Business Cycle and Health Dynamics during the COVID-19 Pandemic: A Scandinavian Perspective," CAMA Working Papers 2024-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2024-19
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    More about this item

    Keywords

    COVID-19; simultaneity; expectations; business cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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