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© 2021 International Monetary Fund


IMF Working Paper

Western Hemisphere Department

Recoveries After Pandemics: The Role of Policies and Structural Features

Prepared by Juan Pablo Cuesta Aguirre and Swarnali Ahmed Hannan

Authorized for distribution by Rishi Goyal

July 2021

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.


To shed light on the possible scarring effects from Covid-19, this paper studies the economic effects of five past pandemics using local projections on a sample of fifty-five countries over 1990–2019. The findings reveal that pandemics have detrimental medium-term effects on output, unemployment, poverty, and inequality. However, policies can go a long way toward alleviating suffering and fostering an inclusive recovery. The adverse output effects are limited for countries that provided relatively greater fiscal support. The increases in unemployment, poverty, and inequality are likewise lower for countries with relatively greater fiscal support and relatively stronger initial conditions (as defined by higher formality, family benefits, and health spending per capita).

JEL Classification Numbers: E6, I1, I30, O1

Keywords: pandemics, output, unemployment, poverty, inequality, fiscal support, informality, social expenditure, health expenditure.

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Recoveries After Pandemics: The Role of Policies and Structural Features
Author: Juan Pablo Cuesta Aguirre and Mrs. Swarnali A Hannan