Lockdown Policies and Fiscal Policy Stimulus Packages: Cross-Country Evidence from COVID-19 Era
Lockdown Policies and Fiscal Policy Stimulus Packages: Cross-Country Evidence from COVID-19 Era

Author(s): Mert Topcu
Subject(s): Social Sciences, Economy
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Lockdown policy; Fiscal stimulus package; COVID-19
Summary/Abstract: Lockdown policies, at the forefront to mitigate the spread of the coronavirus, have led governments to face a trade-off between health and recessionary impacts. To deal with the devastating economic impacts of the pandemic, governments around the world have announced stimulus packages. Given the fiscal burden of health-oriented policies, this study investigates the impact of lockdown policies on fiscal policy stimulus packages. Using simple cross-country OLS regression for 162 countries, this study finds that a stricter lockdown policy requires a higher stimulus package. In addition, threshold regression results indicate that a stringent policy is associated with a higher stimulus package for the countries where income distribution is relatively unequal and institutional quality is relatively lower.

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