COVID-19 Vaccination and Financial Frictions

We study the COVID-19 epidemic in emerging markets that face financial frictions and its mitigation through social distancing and vaccination. We find that restricted vaccine availability in emerging markets, as captured by limited quantities and high prices, renders the pandemic exceptionally costly in these countries, compared with economies without financial frictions. Improved access to financial markets enables a better response to the delay in vaccine supplies, as it supports more stringent social distancing measures before wider vaccine availability. We show that financial assistance programs to such financially constrained countries can increase vaccinations and lower fatalities, at no present-value cost to the international community.

Assessing the nexus between COVID-19 pandemic-driven economic crisis and economic policy: lesson learned and challenges.

This study examines China's budgetary policy during the COVID-19 pandemic as a result of China's insufficient ability to deal with a new crisis when the epidemic struck in March 2020 and as a result of the economic crisis that began in China in March 2020. In order to better comprehend China's economic status during COVID-19, the study relies on secondary data. The fiscal response of emerging market economies like India is less than in advanced economies. However, it is generally considered to be in line with the average for emerging market economies. As a result of the Disaster Management authority imposing a rigorous lockdown, unemployment rose, the trade cycle was interrupted, and manufacturing and service activities were affected. According to the study's findings, China's economic policies, namely its fiscal policy, responded in the years leading up to 2019 by increasing health expenditure, income transfer, welfare payments, subsidies, and reducing short-term unemployment. As a result of the COVID-19 pandemic, China's government has adopted a number of measures to minimize the damage to the economy. This article also focuses on China's numerous budgetary actions with COVID-19.

On the importance of fiscal space:evidence from short sellers during the COVID-19 pandemic.

Using the exogenous shock of the COVID-19 pandemic, we study how informed market participants incorporate fiscal space into their trading decisions. At the onset of the pandemic, short-selling activity shifted towards companies with low financial flexibility but only in countries with limited fiscal space. Among such companies, short sellers specifically targeted those that generate their revenues mainly in the domestic market. These short sellers entered their positions before the market crash, thereby generating significant abnormal returns. We find no evidence of either herding behavior prior to the market crash or a long-run performance reversal of short sellers. These findings support the notion that short sellers help to promote price efficiency in times of crisis, where governments with budgetary constraints are unable to provide sufficient stimuli to their economies.

The 2019 Philippine UHC Act, Pandemic Management and Implementation Implications in a Post-COVID-19 World: A Content Analysis.

The 2019 Philippine Universal Health Care Act (Republic Act 11223) was set for implementation in January 2020 when disruptions brought on by the pandemic occurred. Will the provisions of the new UHC Act for an improved health system enable agile responses to forthcoming shocks, such as this COVID-19 pandemic? A content analysis of the 2019 Philippine UHC Act can identify neglected and leverage areas for systems' improvement in a post-pandemic world. While content or document analysis is commonly undertaken as part of scoping or systematic reviews of a qualitative nature, quantitative analyses using a two-way mixed effects, consistency, multiple raters type of intraclass correlation coefficient (ICC) were applied to check for reliability and consistency of agreement among the study participants in the manual tagging of UHC components in the legislation. The intraclass correlation reflected the individuals' consistency of agreement with significant reliability (0.939, p < 0.001). The assessment highlighted a centralized approach to implementation, which can set aside the crucial collaborations and partnerships demonstrated and developed during the pandemic. The financing for local governments was strengthened with a new ruling that could alter UHC integration tendencies. A smarter allocation of tax-based financing sources, along with strengthened information and communications systems, can confront issues of trust and accountability, amidst the varying capacities of agents and systems.

FISCAL SPACE FOR EMERGENCIES IN MUNICIPALITIES

Emergencies that have become an integral part of the lives of different municipalities and the threat of their negative consequences requires an adequate response from local governments. The article outlines the main causes of such situations and substantiates the need to address them by joining efforts both at the national level and at the level of local self-government. The concept of fiscal space is considered by the authors as the presence of a certain budget reserve to achieve the desired goals without violating financial stability. In the context of emergencies, this is a fiscal space to fund certain goals, which can sometimes be actualized in a very short time (as happened with the situation in health care in 2020). The possibility of targeting the fiscal space in the field of health care, social protection, overcoming the effects of natural disasters, combating poverty, achieving the goals of sustainable development, etc. is noted. The article presents the results of a study of the impact of emergencies (eg, the COVID-19 pandemic) on the ability of local authorities to respond to their consequences. The authors analyzed budget expenditures to combat COVID-19 and assessed changes in the financial capacity of municipalities and funding priorities, including funding for pandemic control at the national and subnational levels, the impact of the COVID-19 pandemic on municipal finances in terms of compliance with the principles of the European Charter of Local Self-Government, the impact on funding priorities at the local level and municipality development strategies, the ability of local governments to respond to emergencies and highlighted some already tested effective practices. The article examines the methods of forming fiscal space, which were used to overcome the consequences of emergencies: reprioritization of expenditures, improving the efficiency of available resources, revenues to local budgets, which are additionally obtained due to understatement of initial revenue plans, reserve fund.

Emerging markets sovereign CDS spreads during COVID-19: Economics versus epidemiology news.

Can bad news about COVID-19 induce negative expectations on sovereign credit risks? We investigate the factors driving credit default swap (CDS) spreads of emerging market sovereigns around the outbreak of COVID-19. Using 2014-2019 data, we estimate a two-factor model of global and regional risks and then extrapolate the model-implied spreads for the period July 2019-June 2020. Intriguingly, the model initially predicts the realized spreads well but loses predictive accuracy during the COVID-19 pandemic. Fiscal space and oil-revenue dependence primarily drive the differences between the realized and predicted sovereign spreads. Our augmented-factor model indicates that the cumulative COVID-19 mortality rate growth is positively associated with the CDS spreads. The evidence suggests that the epidemiological deterioration can lower confidence in the sovereign credit markets due to the prospects of prolonged lockdowns and a slower GDP growth recovery. Our results also hold for a single regression of daily spread changes during 2014-2020.

Improving public hospital efficiency and fiscal space implications: the case of Mauritius.

BACKGROUND: General Government Health Expenditure (GGHE) in Mauritius accounted for only 10% of General Government Expenditure for the fiscal year 2018. This is less than the pledge taken under the Abuja 2001 Declaration to allocate at least 15% of national budget to the health sector. The latest National Health Accounts also urged for an expansion in the fiscal space for health. As public hospitals in Mauritius absorb 70% of GGHE, maximising returns of hospitals is essential to achieve Universal Health Coverage. More so, as Mauritius is bracing for its worst recession in 40 years in the aftermath of the COVID-19 pandemic public health financing will be heavily impacted. A thorough assessment of hospital efficiency and its implications on effective public health financing and fiscal space creation is, therefore, vital to inform ongoing health reform agenda. OBJECTIVES: This paper aims to examine the trend in hospital technical efficiency over the period 2001-2017, to measure the elasticity of hospital output to changes in inputs variables and to assess the impact of improved hospital technical efficiency in terms of fiscal space creation. METHODS: Annual health statistics released by the Ministry of Health and Wellness and national budget of the Ministry of Finance, Economic Planning and Development were the principal sources of data. Applying Stochastic Frontier Analysis, technical efficiency of public regional hospitals was estimated under Cobb-Douglas, Translog and Multi-output distance functions, using STATA 11. Hospital beds, doctors, nurses and non-medical staff were used as input variables. Output variable combined inpatients and outpatients seen at Accident Emergency, Sorted and Unsorted departments. Efficiency scores were used to determine potential efficiency savings and fiscal space creation. FINDINGS: Mean technical efficiency scores, using the Cobb Douglas, Translog and Multi-output functions, were estimated at 0.83, 0.84 and 0.89, respectively. Nurses and beds are the most important factors in hospital production, as a 1% increase in the number of beds and nurses, result in an increase in hospital outputs by 0.73 and 0.51%, respectively. If hospitals are to increase their inputs by 1%, their outputs will increase by 1.16%. Hospital output process has an increasing return to scale. With technical efficiencies improving to scores of 0.95 and 1.0 in 2021-2022, potential savings and fiscal space creation at hospital level, would amount to MUR 633 million (US$ 16.2 million) and MUR 1161 million (US$ 29.6 million), respectively. CONCLUSION: Fiscal space creation through full technical efficiency, is estimated to represent 8.9 and 9.2% of GGHE in fiscal year 2021-2022 and 2022-2023, respectively. This will allow without any restrictions the funding of the national response for HIV, vaccine preventable diseases as well as building a resilient health system to mitigate impact of emerging infectious diseases as experienced with COVID-19.