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

6th International Scientific Conference – EMAN 2022 – Economics and Management: How to Cope With Disrupted Times, Ljubljana, Slovenia, March 24, 2022, CONFERENCE PROCEEDINGS, published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; ISBN 978-86-80194-57-8, ISSN 2683-4510

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.

Keywords:

Lockdown policy; Fiscal stimulus package; COVID-19

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