Chudik, A., Mohaddes, K. and Raissi, M.

Covid-19 Fiscal Support and its Effectiveness

WP Number: 2109

Abstract: This paper uses a threshold-augmented Global VAR model to quantify the macroeconomic effects of countries' discretionary fiscal actions in response to the Covid-19 pandemic and its fallout. Our results are threefold: (1) fiscal policy is playing a key role in mitigating the effects of the pandemic; (2) all else equal, countries that implemented larger fiscal support are expected to experience less output contractions; (3) emerging markets are also benefiting from the synchronized fiscal actions globally through the spillover channel and reduced financial market volatility.

Keywords: TGVAR, Covid-19, threshold effects, fiscal policy

JEL Codes: C32 E44 E62 F44

Author links: Kamiar Mohaddes  

PDF: wp2109.pdf

Open Access Link: 10.17863/CAM.91984

Theme: transmission

Published Version of Paper: Covid-19 Fiscal Support and its Effectiveness, Chudik, A., Mohaddes, K. and Raissi, M., Economics Letters (2021)