Publication: COVID-19 and emerging markets: a SIR model, demand shocks and capital flows
Program
KU Authors
Co-Authors
Ozcan, Sebnem Kalemli
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Type
Embargo Status
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Abstract
We quantify the macroeconomic effects of COVID-19 for a small open economy. We use a two-country framework combined with a sectoral SIR model to estimate the effects of collapses in foreign demand and supply. The small open economy (country one) suffers from domestic demand and supply shocks due to its own pandemic. In addition, there are external shocks coming from the rest of the world (country two). Aggregate exports of the small open economy decline when foreign demand goes down, and aggregate imports suffer from lockdowns in the rest of the world. We calibrate the model to Turkey. Our results show that the optimal policy, which yields the lowest output loss and saves the maximum number of lives, for the small open economy, is an early and globally coordinated full lockdown of 39 days.
Source
Publisher
Elsevier
Subject
Economics
Citation
Has Part
Source
Journal of International Economics
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Edition
DOI
10.1016/j.jinteco.2023.103825