Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Voluntary and government-mandated lockdowns in response to COVID-19 have caused causing drastic reductions in economic activity around the world. We present a parsimonious two-country-SIR model with some degree of substitutability between home and foreign goods, and show that trading partners’ asynchronous entries into the global pandemic induce mutual welfare gains from trade. Those gains are realized through exchange rate adjustments that cause a temporary reallocation of production towards the economy with the lowest infection rate at any point in time. We show that international cooperation over containment policies that aim at optimizing global welfare further enhances the ability of countries to exploit trade opportunities to contain the spread of the pandemic. We characterize the Nash game of strategic choices of containment policies as a prisoners’ dilemma.

Business and Economics --- Health and Fitness --- Exports and Imports --- Macroeconomics --- Taxation --- Diseases: Contagious --- General Aggregative Models: General --- Macroeconomic Aspects of International Trade and Finance: General --- Public Economics: General --- Health: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Empirical Studies of Trade --- Labor Economics: General --- Business Taxes and Subsidies --- Health Behavior --- International economics --- Labour --- income economics --- Public finance & taxation --- Infectious & contagious diseases --- Consumption --- Terms of trade --- Labor --- Consumption taxes --- COVID-19 --- National accounts --- Health --- International trade --- Taxes --- Economics --- Economic policy --- nternational cooperation --- Labor economics --- Spendings tax --- Communicable diseases --- China, People's Republic of

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Bolivia has achieved noteworthy success over the past 15 years in raising incomes, reducing poverty, and maintaining macroeconomic stability by deploying commodity revenues to finance transfers, public investment, and state-led development, using an exchange rate peg as a policy anchor. However, with the end of the commodity boom in 2014, fiscal deficits have grown and reserves have fallen. One route to restoring long-run sustainability would be to combine fiscal consolidation with a switch to a floating exchange rate. However, a preference for maintaining the peg could be accommodated with adjustments elsewhere in the policy framework. Employing a detailed dynamic stochastic general equilibrium model of the Bolivian economy, this study assesses the long-run sustainability and relative benefits of alternative policy combinations, and calculates optimal adjustment paths for the transition from the present situation to the steady state. It concludes that continued adherence to a fixed-rate regime, while not optimal, is feasible, if supported by a larger fiscal effort.

Bolivia