Is democracy affecting the economic policy responses to COVID-19? A cross-country analysis

How does democracy relate to the initial economic policy responses to Covid-19? Using a cross-country analysis, we find that countries with a higher degree of democracy have stronger economic policy responses than their peers. However, when we separate monetary and financial policies from fiscal pol...

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Bibliographic Details
Published in:IDEAS Working Paper Series from RePEc 2020-01
Main Authors: Costa-Filho, João, Neto, António
Format: Article
Language:English
Subjects:
Coronaviruses
COVID-19
Democracy
Economic policy
Online Access:Request full text
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Summary:How does democracy relate to the initial economic policy responses to Covid-19? Using a cross-country analysis, we find that countries with a higher degree of democracy have stronger economic policy responses than their peers. However, when we separate monetary and financial policies from fiscal policy, democracy is not associated with the latter when we control for the income level of a country. Finally, for countries with lower levels of labor participation, high levels of income inequality are associated with weaker policy responses.