COVID-19 and Emerging Markets: A SIR Model, Demand Shocks and Capital Flows / Cem Çakmaklı, Selva Demiralp, Ṣebnem Kalemli-Özcan, Sevcan Yesiltas, Muhammed A. Yildirim.

Format:

Book

Author/Creator:

Çakmaklı, Cem.

Contributor:

National Bureau of Economic Research.

Demiralp, Selva.

Kalemli-Özcan, Ṣebnem.

Yesiltas, Sevcan.

Yildirim, Muhammed A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27191.

NBER working paper series no. w27191

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

We quantify the macroeconomic effects of COVID-19 for a small open economy. We use a two country framework combined with a sectoral-SIR model to estimate the effects of collapses in foreign demand and supply. The small open economy suffers from domestic demand and supply shocks due to its own pandemic. In addition, there are external shocks coming from rest of the world (country two). Aggregate exports of the small open economy go down when foreign demand goes down, and aggregate imports suffer from lockdowns in the rest of the world. We calibrate the model to Turkey. Our results show that the optimal policy, which yields the lowest output loss and saves the maximum number of lives, for the small open economy, is an early and globally coordinated full lockdown of 39 days.

Notes:

Print version record

May 2020.