A study by the University of California found that viruses such as COVID-19 can strike severely for several years.
The coronavirus pandemic could cause economic damage that will last for decades, if past patterns are anything to go by, according to researchers who have studied data dating back to the 14th century.
In a study of 12 major pandemics as well as armed conflicts, economists Oscar Jorda, Sanjay Singh and Alan Taylor of the University of California, Davis, concluded in their investigation “Longer-Run Economic Consequences of Pandemics” that pandemics depress real interest rates, generate small real wage increases and burden investment.
Real wages end up rising slightly due to labor shortages, they explained, and lower real rates provide fiscal space for governments to mitigate the consequences.
“If trends follow the same patterns because of COVID-19, adjusted to the scale of this pandemic, the overall economic trajectory will be very different from what was predicted a few weeks ago,” they wrote in the report. “Pandemics are followed by extended periods, over several decades, of limited investment opportunities”.
The main caveat identified by economists is that past pandemics occurred at a time when virtually no member of society survived into old age.
“The Black Death and other plagues hit populations where the main part of the age pyramid was below 60, so this time could be different,” they said.
The Yucatan Times
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