Covid-19 Fiscal Support and its Effectiveness

This paper uses a threshold-augmented Global VAR model to quantify the macroeconomic effects of countries’ discretionary fiscal actions in response Covid-19 pandemic and its fallout. Our results are threefold: (1) policy is playing key role mitigating pandemic; (2) all else equal, countries that implemented larger support expected experience less output contractions; (3) emerging markets also benefiting from synchronized globally through spillover channel reduced financial market volatility.