(DP 2021-08) Growth During the Time of Covid19

Renato E. Reside, Jr.


This short piece discusses the results of simple regression analysis using cross country data to determine the factors that have influenced fluctuations in real output during the covid-19 pandemic period. Focus is on explaining not only output growth from 2020 to the first half of 2021, but also the length or duration of recessions. The most prominent factors influencing growth include the ability of a country to contain the spread of infections and vaccinate their population. The size of the covid19-induced fiscal stimulus, also matters, especially health care spending. However, the relationship is nonlinear. Beyond a certain point, fiscal spending leads to lower quarterly growth. Policy recommendations are given.

JEL Classification: E6, E62, E65, H11, H12, H51, I18



Economic growth; fiscal policy; government expenditures; covid19; crisis management

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