The Macroeconomic Spillover Effects of the Pandemic on the Global Economy

11 Pages Posted: 9 Apr 2020

See all articles by Emanuel Kohlscheen

Emanuel Kohlscheen

Bank for International Settlements (BIS)

Benoît Mojon

Bank for International Settlements (BIS)

Daniel Rees

Bank for International Settlements (BIS)

Date Written: April 6, 2020

Abstract

Given the historical persistence of economic activity, the reduction of GDP due to confinement measures is likely to drag on over several quarters. The total GDP shortfall could be as much as twice that implied by the direct initial effects of confinement. This persistence reflects in part two types of spillovers across countries. One is due to the risk that uncoordinated confinements lead to repeated virus outbreaks and confinements across the globe. Another is the more traditional trade and financial integration interlinkages. Economic spillovers and spillbacks across the major economic blocs are large. There is no immunity from the economic effects if the epidemic is controlled in only one or two regions. Countries should adopt confinement, border control and macroeconomic policies that internalise these global considerations.

Keywords: COVID-19, spillovers, GDP

JEL Classification: E10, F00

Suggested Citation

Kohlscheen, Emanuel and Mojon, Benoît and Rees, Daniel, The Macroeconomic Spillover Effects of the Pandemic on the Global Economy (April 6, 2020). Available at SSRN: https://ssrn.com/abstract=3569554 or http://dx.doi.org/10.2139/ssrn.3569554

Emanuel Kohlscheen (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Benoît Mojon

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Daniel Rees

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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