Impact of Covid-19 on economic recovery: empirical analysis from China and global economies

Abstract

This research aims to utilize quarterly global VAR data from April 1, 2020, to September 30, 2021, to assess the influence of the economic recovery of China following the COVID-19 outbreak on global economies. China is one of the first big economies globally to show indications of recovery following the COVID-19 pandemic. The nation's economic growth has the biggest long-term influence on middle-income nations (0.17%) followed by low- and middle-income economies (0.16%) and high-income economies (0.16%) (0.15%). The chain reaction of China's economic growth is most visible in high-income nations (0.11–0.45%), followed by middle-income countries (0.08–0.33%) and low-income countries (0.02–0.05%). Our findings show that the post-COVID-19 economic rebound in China will mostly benefit middle-income nations, with low- and middle-income countries following closely after. After COVID-19, the influence of the economic recovery of China is most visible in the rise of energy consumption in high-income nations, followed by middle-income economies. It is also worth noting that the influence of China's economic expansion on low- and middle-income economies does not always imply a rise in energy consumption. Overall, China's economic recovery has a significantly stronger influence on other countries’ economic development than other countries’ energy consumption has on other economies’ growth.

The macro-economic and CO2 emissions impacts of COVID-19 and recovery policies in China

“…The Armington condition is satisfied between the two, as there is imperfect substitution between imports and domestic products. Gross domestic output is sold domestically and abroad under the profit maximisation principle, and producers choose between the domestic market and exporting, using a fixed constant elasticity of transformation (CET) function for the combination ( Zhang et al, 2022a ).…”

“…At the beginning of the COVID-19 pandemic, to control the spread of the virus, many countries adopted mandatory restrictions, such as social distancing, closures, quarantines and restrictions on production activities, which severely damaged global socio-economic operations ( Dong et al, 2022 , Nicola et al, 2020 , Xu and Wei, 2021 ). These restrictions led to significant changes in energy consumption and CO 2 emissions ( Shan et al, 2021 , Zhang et al, 2022a ). During COVID-19 restrictions, people spent more time working from home and engaging in online activities more frequently, which reduced the CO 2 generated by social mobility, such as commuting or travelling outside of the home ( Zhou et al, 2020 ).…”

Mitigating the conflict between economic and green development: Emission reduction mechanisms for vertical transfer payments

“…A number of scholars have found that the transfer payment policy for ecological functional areas increases the efficiency of a region's green economy, improves the quality of its ecological environment, and promotes the development of a regional green economy (Chen et al, 2021, 2023; Yang, 2023). However, some studies have shown that transfer payments provided by the central government to resource‐exhausted cities can exacerbate haze pollution in local cities, as well as limit technological innovation and high‐tech industrial agglomeration (Yang et al, 2023).…”

“…In addition to this, vertical transfers enable the central government to better control local governments' spending behavior. The central government regulates and restrains the expenditure behavior of local governments through the assessment and accountability mechanism for the use of transfer funds (Yang et al, 2023), and reduce the information asymmetry in the principal–agent problem, thus optimizing and increasing the allocation and transparency of local governments' fiscal expenditures, respectively. Therefore, the vertical transfer system can help local governments optimize the structure of fiscal expenditure, thus promoting the high‐quality development of the local economy.…”

The impact of the COVID-19 pandemic on China's economic structure: An input–output approach

“…(2022) develop a CGE model to evaluate the effect of government interventions in response to COVID-19 on production, final demand, and disposable income in Sardinia, Italy. Using vector autoregressive (VAR) models, Zhang et al. (2022) and Zhou et al.…”