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A primer on the macroeconomic effects of an influenza pandemic

Author

Listed:
  • Steven Kennedy

    (Treasury, Government of Australia)

  • Jim Thomson

    (Treasury, Government of Australia)

  • Petar Vujanovic

    (Treasury, Government of Australia)

Abstract

Interest in pandemics has increased dramatically in recent times with the emergence of Avian Influenza and conditions conducive to a global flu outbreak. While understandably most of the focus is on public health policies that might prevent or ameliorate the effects of a pandemic, there is often reference to the possible economic effects. This paper discusses the pathways through which a pandemic might affect the Australian economy. The Treasury macro-econometric model (TRYM) is used to illustrate these pathways. The paper finds that confidence effects and the (large) short term withdrawal of labour are probably the dominant mechanisms through which a pandemic adversely affects the economy. The macroeconomic policy implications flow naturally from these potential economic effects. In particular, policies that restore confidence and consumption, support business in the short term, and promote a quick return to work are likely to be most effective in offsetting the adverse economic consequences of a pandemic.

Suggested Citation

  • Steven Kennedy & Jim Thomson & Petar Vujanovic, 2006. "A primer on the macroeconomic effects of an influenza pandemic," Treasury Working Papers 2006-01, The Treasury, Australian Government, revised Feb 2006.
    • Handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2006_1
    as

    Download full text from publisher

    File URL: http://archive.treasury.gov.au/documents/1069/PDF/TWP_01_2006.pdf
    File Function: First version, 2006
    Download Restriction: no
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    References listed on IDEAS

    as
    1. World Bank, 2005. "East Asia Update, November 2005 : Countering Global Shocks," World Bank Publications - Reports 12850, The World Bank Group.
    2. Australian Treasury, 2003. "The economic impact of Severe Acute Respiratory Syndrome (SARS)," Economic Roundup, The Treasury, Australian Government, issue 2, pages 43-60, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Policy responses > Macroeconomic
    2. > Economics of Welfare > Health Economics > Economics of Pandemics > Consequences > Macroeconomic

    Citations

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    Cited by:

    1. Ilan Noy & Tomáš Uher, 2022. "Economic consequences of pre-COVID-19 epidemics: a literature review," Chapters, in: Mark Skidmore (ed.), Handbook on the Economics of Disasters, chapter 7, pages 117-133, Edward Elgar Publishing.
    2. Fukunari Kimura & Shandre Mugan Thangavelu & Dionisius Narjoko & Christopher Findlay, 2020. "Pandemic (COVID‐19) Policy, Regional Cooperation and the Emerging Global Production Network†," Asian Economic Journal, East Asian Economic Association, vol. 34(1), pages 3-27, March.
    3. Jeff Borland & Andrew Charlton, 2020. "The Australian Labour Market and the Early Impact of COVID‐19: An Assessment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(3), pages 297-324, September.
    4. Ilan Noy & Tomáš Uher, 2022. "Economic consequences of pre-COVID-19 epidemics: a literature review," Chapters, in: Mark Skidmore (ed.), Handbook on the Economics of Disasters, chapter 7, pages 117-133, Edward Elgar Publishing.
    5. Renigier-Biłozor, Małgorzata & Źróbek, Sabina & Walacik, Marek & Janowski, Artur, 2020. "Hybridization of valuation procedures as a medicine supporting the real estate market and sustainable land use development during the covid-19 pandemic and afterwards," Land Use Policy, Elsevier, vol. 99(C).

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    More about this item

    Keywords

    pandemics; macroeconomic modelling; Avian Influenza;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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