Direkt zum Inhalt

Viral Shocks to the World Economy

Referierte Aufsätze Web of Science

Konstantin A. Kholodilin, Malte Rieth

In: European Economic Review 158 (2023), 104526, 15 S.


We construct a global index of epidemic news based on text analysis of newspapers from 17 countries. We apply the index to study the economic consequences of epidemics on the world economy in structural vector autoregressions. Epidemic shocks exert significantly and persistently negative effects on output and prices that last for up to two years. There is no quick recovery and no overshooting. The output losses are permanent. Country studies show that the direct effects are substantially larger than the indirect effects through trade and financial markets. Furthermore, the simultaneous fall of output and prices suggests that demand dominate supply contractions and that monetary and fiscal stimuli are appropriate crisis responses to minimize permanent output losses.

Malte Rieth

Research Associate in the Macroeconomics Department

Konstantin A. Kholodilin

Research Associate in the Macroeconomics Department

JEL-Classification: C32;E62;H12;I18
Keywords: Epidemics, pandemicstext analysis, structural vector autoregressions, Covid-19, world economy

Supplementary data