Deadly Debt Crises: COVID-19 in Emerging Markets

Arellano, Cristina; Bai, Yan; Mihalache, Gabriel

doi:10.3386/w27275

Cited by 79 publications

(79 citation statements)

References 26 publications

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“…The finding that the tradeoff between livelihoods and lives lost underlying these findings hinges on a country's income level is supported by empirical evidence in Decerf et al (2020). Taking a perspective on lockdown in emerging economies, Arellano et al (2020) show that the risk of a debt crisis may seriously inhibit lockdown polices and conclude that relaxing the tradeoff between health and debt crises makes a strong case for debt relief.…”

Section: Covid-19mentioning

confidence: 91%

Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

Bloom

Kühn

Prettner³

2020

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Section: Covid-19mentioning

confidence: 91%

Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

Bloom

Kühn

Prettner³

2020

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“…. Kalemli-Özcan, Yesiltas, and Yildirim (2020) and Arellano, Bai, and Mihalache (2020), among others. We also abstract from differences in the prevalence of comorbities, such as diabetes and cardiovascular disease, which may affect fatality rates.…”

Section: Introductionmentioning

confidence: 93%

How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?

Alon¹,

Kim²,

Lagakos³

et al. 2020

130

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This paper quantitatively analyzes how policy responses to the COVID-19 pandemic should differ in developing countries. To do so we build an incomplete-markets macroeconomic model with heterogeneous agents and epidemiological dynamics that features several of the key distinctions between advanced and developing economies germane to the pandemic. We focus in particular on differences in: age structure, fiscal capacity, healthcare capacity, informality, and the frequency of contacts between individuals at home, work, school and other locations. The model predicts that blanket lockdowns are less effective in developing countries, saving fewer lives per unit of lost GDP. In contrast, age-specific policies are even more effective, since they focus scarce public funds on shielding the smaller population of older individuals. School closures are also more effective at saving lives in developing countries, providing a greater reduction in secondary transmissions between children and older adults at home.

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“… See Cakmakli et al (2020) for the earlier working paper version of our model, April (2020). 2 SeeArellano et al (2020) who also focuses on emerging markets by analysing sovereign debt and default risk under COVID shock with a SIR and sovereign debt model.…”

mentioning

confidence: 99%

COVID-19 and Emerging Markets: A SIR Model, Demand Shocks and Capital Flows

Çakmaklı¹,

Demiralp²,

Kalemli‐Özcan³

et al. 2020

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We quantify the macroeconomic effects of COVID-19 for emerging markets using a SIRmultisector-small open economy model and calibrating it to Turkey. Domestic infection rates feed into both sectoral supply and sectoral demand shocks. Sectoral demand shocks also incorporate lower external demand due to foreign infection rates. Infection rates change endogenously with different lockdown policies. To calibrate the model, we use indicators of physical proximity and tele-workability of jobs to measure supply shocks. We use real-time credit card purchases to pin down demand shocks. Our results show that the optimal policy, which yields the lowest economic cost and saves the maximum number of lives, can be achieved under a full lockdown of 39 days. Partial and/or no lockdowns have higher economic costs as it takes longer to control the disease and hence to normalize the demand. Economic costs are much larger for an open economy because of the amplification role of international input-output linkages. Lower capital flows exacerbate this amplification as capital flows are the key form of financing for the production network. We document that sectors with stronger international input-output linkages and higher external debt suffer worse COVID losses and as a result have larger fiscal needs.

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Deadly Debt Crises: COVID-19 in Emerging Markets

Cited by 79 publications

References 26 publications

Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?

COVID-19 and Emerging Markets: A SIR Model, Demand Shocks and Capital Flows

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