The New Fiscal Normal: Vaccinations, Debt, and Fiscal Adjustment in Emerging Economies
What is the potential impact of vaccination programs and different fiscal adjustment scenarios on countries after suffering the macro-fiscal effects of the pandemic? We calibrate a DSGE model with an epidemiological module for the average Latin American and Caribbean economy that uses fiscal policy and vaccination to contain these effects. We find that there is a trade-off in the application of one of these policies. Focusing on vaccination has a high return in saving lives and improving economic growth but a lower fiscal adjustment. We conclude that simultaneous vaccination and fiscal reform is a successful policy combination that helps countries mitigate the health effects of the pandemic, reduce the economic cost of fiscal policy, and move toward a path of fiscal consolidation.
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| Language: | English |
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Inter-American Development Bank
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| Subjects: | Fiscal Policy, Epidemic, Pandemic, Coronavirus, Fiscal Consolidation, Gross Domestic Product, Macroeconomy, Emerging Market, E17 - Forecasting and Simulation: Models and Applications, E62 - Fiscal Policy, H30 - Fiscal Policies and Behavior of Economic Agents: General, H51 - Government Expenditures and Health, H60 - National Budget Deficit and Debt: General, Epidemics;macroeconomics;vaccination;vaccination growth multiplier;Fiscal policy, |
| Online Access: | http://dx.doi.org/10.18235/0003617 https://publications.iadb.org/en/new-fiscal-normal-vaccinations-debt-and-fiscal-adjustment-emerging-economies |
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