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Title: Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
Authors: Feng, Qu 
Wu, Laura Guiying
Yuan, Mengying
Zhou, Shihao
Keywords: Social sciences::Economic theory
Issue Date: 2022
Source: Feng, Q., Wu, L. G., Yuan, M. & Zhou, S. (2022). Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth. Journal of Economic Behavior and Organization, 197, 221-256.
Project: RG162/18 
Journal: Journal of Economic Behavior and Organization 
Abstract: This paper studies whether containing COVID-19 pandemic by stringent strategies deteriorates or saves economic growth. Since there are country-specific factors that could affect both economic growth and deaths due to COVID-19, we first start with a cross-country analysis on identifying risk and protective factors on the COVID-19 deaths using large across-country variation. Using data on 100 countries from 3 January to 27 November 2020 and taking into account the possibility of underreporting, we find that for deaths per million population, GDP per capita, population density, and income inequality are the three most important risk factors; government effectiveness, temperature, and hospital beds are the three most important protective factors. Second, inspired by the stochastic frontier literature, we construct a measure of pandemic containment effectiveness (PCE) after controlling for country-specific factors and rank countries by their PCE scores for deaths. Finally, by linking the PCE score with GDP growth data in Quarters 2 and 3 of 2020, we find that PCE is positively associated with economic growth in major economies. Countries with average PCE scores, such as Malaysia, would gain more GDP growth by 3.47 percentage points if they could improve their PCE scores for deaths to South Korea's level in Q2 of 2020. Therefore, there is not a trade-off between lives and livelihood facing by governments. Instead, to save economy, it is important to contain the pandemic first. Our conclusion is also mainly valid for infections due to COVID-19.
ISSN: 0167-2681
DOI: 10.1016/j.jebo.2022.02.027
Schools: School of Social Sciences 
Rights: © 2022 Elsevier B.V. All rights reserved. This paper was published in Journal of Economic Behavior and Organization and is made available with permission of Elsevier B.V.
Fulltext Permission: embargo_20250607
Fulltext Availability: With Fulltext
Appears in Collections:SSS Journal Articles

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