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Fiscal Essay

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ED'z Santos
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Fiscal Essay

Uploaded by

ED'z Santos
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Essay on the Economic and Fiscal Impact of 2020 Pandemic

(Compliance Requirement for MAPM 202 Public Fiscal Policy & Budgeting)
Submitted by: Eden Jhun M Santos
Submitted to: Prof. Veronica Juvy Morelos

The COVID-19 pandemic's impact went far beyond a health crisis. In the
wake of it, a multitude of rigorous studies have been undertaken to assess its
profound effects on global fiscal health and economic performance. These
investigations serve the critical purpose of generating a robust data-driven record of
the pandemic's impact, informing future policy decisions and preparedness efforts.
The following section will delve into some of the most credible and insightful studies
conducted in this domain.

In the study conducted by Warwick and Roshen (2023) they paper evaluates
the global economic impacts of the COVID-19 pandemic. They illustrates that the
public health and economic policy responses to the pandemic have been very
different across countries, and those policy responses influence the economic
outcomes of the pandemic. Despite the uncertainties regarding the evolution of the
pandemic in the short and medium term, COVID-19 is a significant negative shock to
the global economy. They added, withdrawing macroeconomic support and creating
‘fiscal cliffs’ by setting expiry dates on critical fiscal support policies in economies is
likely to worsen the uncertainty and increase the economic costs. Preventing countries
from undertaking more substantial fiscal stimulus measures either through
institutional arrangements or by lack of access to financing also increases the cost of
the pandemic.

Meanwhile, the World Development Report (2022) documented that the


COVID-19 pandemic triggered the largest global economic crisis in more than a
century. According to their report that in 2020, economic activity contracted in 90
percent of countries, the world economy shrank by about 3 percent, and global
poverty increased for the first time in a generation. Governments enacted a swift and
encompassing policy response that alleviated the worst immediate economic
impacts of the crisis. However, the government response also exacerbated a number
of economic fragilities.

In addition Ostry (2021) reported that country characteristics play an important


role in the effectiveness of fiscal policy, with larger effects for advanced economies
and countries with lower public debt levels. In addition, a country’s stage in the
pandemic cycle is critical, with emergency lifelines more effective when 24
containment measures are high and supply is constrained, while demand-support
measures are more effective when containment measures are being eased, and
domestic consumption opportunities are more plentiful. He added that as supply
constraints from containment measures abate, demand-support policies— including
through investment in digital and green infrastructure—will be more effective and can
replace emergency lifelines. In countries with high debt, fiscal policy is less effective
and monetary policy might have to play a larger role to support economic activity

The findings gleaned from comprehensive studies on the fiscal and economic
repercussions of COVID-19 will undoubtedly prove to be of immense value,
particularly in the immediate future for nations like the Philippines, where market

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stability and economic growth are currently facing significant challenges. By
meticulously analyzing the experiences and outcomes of this pandemic, we can
glean valuable lessons that will empower us to more effectively navigate and
mitigate the economic consequences of future public health crises, ensuring the
continued economic viability of nations.

REFERENCE:

Ostry, Jonathan (2021) The Effects of Fiscal Measures During COVID-19.


International Monetary Fund

Warwick McKibbin and Roshen Fernando. 2023. The global economic impacts of
the COVID-19 pandemic, Economic Modelling, Volume 129, 106551, ISSN 0264-
9993,
https://doi.org/10.1016/j.econmod.2023.106551.

World Development Report (2022) Chapter 1. The economic impacts of the


COVID-19 crisis. https://www.worldbank.org/en/publication/wdr2022/brief/chapter-1-
introduction-the-economic-impacts-of-the-covid-19-crisis

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