A theory of fiscal policy response to an epidemic.

Governments worldwide have issued massive amounts of debt to inject fiscal stimulus during the COVID-19 pandemic. This paper analyzes fiscal responses to an epidemic, in which interactions at work increase the risk of disease and mortality. Fiscal policies, which are designed to borrow against the future and provide transfers to individuals suffering economic hardship, can facilitate consumption smoothing while reduce hours worked and hence mitigate infections. We examine the optimal fiscal policy and characterize the condition under which fiscal policy improves social welfare. We then extend the model analyzing the static and dynamic pecuniary externalities under scale economies-the decrease in labor supply during the epidemic lowers the contemporaneous average wage rate while enhances the post-epidemic workforce health and productivity. We suggest that fiscal policy may not work effectively unless the government coordinates working time, and the optimal size of public debt is affected by production technology and disease severity and transmissibility.

Covid-19, Fiscal Policies, and Small-and-Medium-Sized Firm Survival: Evidence From the Cross-Country Matching Analysis.

OBJECTIVE: The present study examines the effect of fiscal policies on firm survival for small-and-medium-sized enterprises in the cross-country level firm-level data. RESEARCH DESIGN: A propensity score matching analysis is utilised for the post-COVID-19 period firms by using the World Bank Enterprise Follow-up Surveys for the pandemic period. Small-and-medium-sized enterprises are essential to the economy; firm failures can increase in a pandemic. RESULTS: The obtained findings show that the effect of fiscal policies has an essential effect on small-and-medium-sized enterprises survival in the COVID-19 pandemic period by using a cross-country heterogenous firm-level sample. CONCLUSIONS: In this context, the present study shed new light on the link between COVID-19-related fiscal policies and small-and-medium-sized firm survival in developing countries.

Assessing the nexus between fiscal policy, COVID-19, and economic growth.

The COVID-19 issue deteriorated South Africa's already dire economic situation, exacerbated by years of considerable debt increase. The COVID-19 pandemic has disrupted trade to such an extent that some enterprises are barely working at a quarter of their potential. Furthermore, economic agents delay economic decisions while waiting to see how the crisis develops. According to some economists, increased government expenditure will raise GDP enough to keep the country's debt-to-GDP ratio steady and restore fiscal sustainability. We use a panel data model to estimate a fiscal reaction function, which we then apply to historical data to assess the government's prior efforts to maintain or restore budgetary sustainability. We calculate the impact fiscal balance, government expenditure, interest rate, and revenue changes that the government will have to make to restore the country's fiscal stability due to the financial impact of the COVID-19 issue.The findings show that fiscal balance and tax revinue have a significant impact on the economics growth, while government expenditure and corruption reduce the growth of the country.

Assessing the impact of green fiscal policies and energy poverty on energy efficiency.

This article estimates the ties between green fiscal policies and energy efficiency in COVID-19 era. For this purpose, data envelopment analysis (DEA) approach is considered and applied. The study findings show that green fiscal policies, such as public supports and tax rebates, have significant role in reducing energy poverty of different international countries by advancing energy efficiency. Therefore, a panel data ranging from 2010 to 2020 is used. Our findings indicate that the aggregate degree of green fiscal policies help to decline energy poverty. Renewable energy companies had larger series of net fiscal competence and size efficiency, and their levels of energy efficiency were greater than 0.457%, with the 16% effect of current public supports and 11% effect of taxation rebates supported to diminish energy poverty with 29.7% in different international economies. This is a positive effect by green fiscal policies. The study also presented policy implications suggesting effectively implementing green fiscal policies for more efficient carbon reduction and making climate change supportive for peoples in post COVID-19 period.