This paper uses a threshold-augmented Global VAR model to quantify the macro-economic effects of countries’ discretionary fiscal actions in response to the Covid-19 pandemic and its fallout. Our results are threefold: (1) fiscal policy is playing a key role in mitigating the effects of the pandemic; (2) all else equal, countries that implemented larger fiscal support are expected to experience less output contractions; (3) emerging markets are also benefiting from the synchronized fiscal actions globally through the spillover channel and reduced financial market volatility.
![COVID-19 Fiscal Support and Its Effectiveness](https://erf.org.eg/app/uploads/2015/12/chudik-150x150.jpg)
Authors
Alexander Chudik
Federal Reserve bank of Dallas, Research Department
![COVID-19 Fiscal Support and Its Effectiveness](https://erf.org.eg/app/uploads/2015/12/1598522258_898_76978_nl_km2020-150x150.png)
Research Fellows
Kamiar Mohaddes
Macroeconomist, Judge Business School, University of Cambridge
![COVID-19 Fiscal Support and Its Effectiveness](https://erf.org.eg/app/uploads/2015/12/1601925303_751_45633_nl_mehdiraissi-150x150.png)
Authors
Mehdi Raissi
Senior Economist, International Monetary Fund