by Marcus Mølbak Ingholt, Monetary Policy Department, Norges Bank.
This blog post provides an overview of research done on the interactions between epidemics and the economy. Causation runs both ways. Economic activity increases social interactions, causing epidemics to spread. Epidemics impede economic activity by inducing households to lower their demand and increasing the frequency of sick leave. Containment, mitigation, and suppression aimed at curtailing epidemics also curtail the economy in the short run. In the medium term, public health interventions may conversely stimulate the economy by suppressing the pandemic. Towards the end of the post, I highlight some avenues for future research relating to both the demand, supply, and financial sides of the economy. Continue reading