Income Convergence or Divergence in the Aftermath of the COVID-19 Shock?

Author: Brussevich Mariya, Liu Shihui, and Papageorgiou Chris

Volume/Issue: Volume 2022 Issue 121

Publication date: June 2022

ISBN: 9798400212727

$20.00

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Topics covered in this book

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Exports and Imports , Economics- Macroeconomics , Economics / General , COVID-19 , convergence , divergence , support policies , income convergence , convergence coefficient , vaccination rate , health impact , targeted virus containment measure , Income , Income inequality , Service exports , Global

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Summary

The paper extends the work of Deaton (2021) by exploring the period of post-crisis recovery in 2021-2024. The paper documents per-capita income divergence during the period of post-shock recovery, with countries at the bottom of the income distribution falling significantly behind. Findings suggest that higher COVID-19 vaccination rates and targeted virus containment measures are associated with faster recovery in per-capita incomes in the medium term. Evidence on the effectiveness of economic support policies for reducing cross-country income inequality, including fiscal and monetary policies, is mixed especially in the case of developing countries.