Government Responds Impact the Short-term Macroeconomic Results in COVID-19

Presenter: Boyang Fu

Research Category:
College: College of Professional Studies
Major(s): Commerce & Economic Developmnt
Graduation Date: 2021
Additional Authors: Yiqi Zhang

Covid-19 has been spreading around the world for almost a year as a public health event. Based on the existing situation in each country, it shows that the epidemic prevention measures have a huge impact on the macroeconomy of each country in the short term. Therefore, the object of this study is how the government response has an impact on the macroeconomy in the short term. We will use different variables based on the Smart PLS model to test the direct and side effects of the government response on the macroeconomy. From the test results, the more stringent the government is, the more negative impact it has on the macroeconomy. This result is in line with the theoretical expectation that the government response sacrifices the macroeconomy in the short run. However, in the long term, the result is effective in controlling the spread of the epidemic and restoring normal production and living order, thus accelerating economic recovery. The goal of this study is to provide data and theoretical support to researchers or governments who intend to explore the relationship between government response and macroeconomic outcomes in large disasters. Even though the government response in the face of a disaster may have a negative impact on the short-term macroeconomic outcome, we hope that the government and the public will ignore the short-term economic outcome in the face of the disaster and prioritize the resolution of the disaster.