The COVID-19 pandemic has profoundly impacted the global economy, with countries experiencing significant declines in economic output and employment. In response, governments around the world have implemented fiscal policy measures aimed at mitigating the economic impact of the pandemic. This thesis examines the effectiveness of these fiscal policy measures in reducing the negative economic consequences of COVID-19.
My research question is: What is the effectiveness of fiscal policy in mitigating the economic impact of COVID-19? I aim to answer this question by analyzing the relationship between various fiscal policy measures implemented by OECD countries and economic outcomes, such as GDP growth and employment, during the pandemic.
My motivation for this research question is the urgent need for policymakers to understand the effectiveness of different fiscal policy measures in responding to crises such as COVID-19. We argue that this research question is important as it can inform future policy responses to similar crises, and help to minimize the negative economic consequences for individuals and businesses.
I use econometric methods, specifically panel data regression analysis, to investigate the effectiveness of fiscal policy measures in mitigating the economic impact of COVID-19. I use a dataset of fiscal policy measures from the IMF and economic outcomes from OECD countries during the pandemic period, and control for other factors such as the severity of the pandemic, pre-existing economic conditions, and institutional factors.
I expect my results to show that fiscal policy measures have been effective in mitigating the negative economic consequences of COVID-19, but the effectiveness has varied across different types of fiscal policy measures and across countries. I expect to find that institutional factors such as fiscal rules and political economy considerations have influenced the effectiveness of fiscal policy measures.
The contribution my thesis to the literature is to provide evidence on the effectiveness of fiscal policy on economic outcomes measures in responding to crises, and to identify factors that can influence the effectiveness of these measures. Our findings can inform policymakers as they develop future policy responses to crises, and contribute to the ongoing debate on the role of fiscal policy in stabilizing the economy.