COVID-19 Pandemic Shock Research Articles

Appraising the oil-stock nexus during the COVID-19 pandemic shock: a panel threshold analysis.

We examine the oil–stock nexus in 24 countries amidst the COVID-19 pandemic and test for threshold effects on oil prices using Hansen (1999) panel dynamic threshold model and recent extensions of Kremer et al. (2013) and Seo and Shin (2016). We find evidence of nonlinearities and threshold effects in oil prices. As an addition to literature, our estimated model shows that stock market prices react in a regime-style manner, when the joint effects of oil prices, exchange rate changes, number of reported cases, and the number of death due to COVID-19 pandemic are analyzed. This is in support of the theoretical model of investor sentiment by Barberis et al. (1998). Therefore, we are of the opinion that policymakers, governments, and investors in their business decision-making process should put into consideration and also observe changes in the global reported cases alongside the number of deaths and how oil prices are evolving, as the global economy is further affected by the COVID-19 pandemic shock.

Cognitive theory of stress and farmers’ responses to the COVID 19 shock; a model to assess coping behaviors with stress among farmers in southern Iran

Better understanding the capacity of farmers to react to the COVID-19 pandemic shock requires analyzing their coping mechanisms. This study investigates the relationship between coping style and coping behaviors with COVID-19, identifying the psychological factors affecting them based on the cognitive theory of stress. Perceived government support is added to the original model as a predictor for coping style and behavior. Cross sectional survey data was collected among farmers living in Dashtestan county of Bushehr province in southern Iran (N = 377). To determine the strength of the model, structural equation modeling (SEM) was performed. We find that demand appraisal and perceived collective efficacy have a positive, direct, and significant effect on coping style and an indirect effect on behaviors. Coping style and perceived government support are significantly related to behavior. The research model predicts 63% and 31% of variance changes in coping style and behavior, respectively. The results of this study provide empirical evidence on how people cope with the COVID-19 shock as well as useful information for designing and implementing health and social programs and policies in the agricultural communities.

Tax revenue instability and tax revenue in developed and developing countries

Purpose This paper aims to explore the effect of non-resource tax revenue instability on non-resource tax revenue in developed and developing countries. Design/methodology/approach The analysis has used an unbalanced panel data set of 146 countries over the period 1981–2016, as well as the two-step system generalized methods of moment approach. Findings The empirical analysis has suggested that non-resource tax revenue instability influences negatively non-resource tax revenue share of gross domestic product. The magnitude of this negative effect is higher in less developed countries than in relatively advanced countries. This negative effect materializes through public expenditure instability: non-resource tax revenue instability exerts a higher effect on non-resource tax revenue share as the degree of public expenditure instability increases. Finally, non-resource tax revenue instability exerts a higher negative effect on non-resource tax revenue share as economic growth volatility rises, inflation volatility increases and terms of trade instability increases. Research limitations/implications The main policy implication of this analysis is that policies that help ensure the stability of non-resource tax revenue also contribute to improving countries’ non-resource tax revenue share. For example, governments’ measures that help cope with or prevent the severe adverse effects of shocks on economies (shocks that could translate into higher tax revenue instability) would ultimately help enhance countries’ tax revenue performance. Practical implications The severity of the current COVID-19 pandemic shock (which is a supply and demand shock) and the macroeconomic uncertainty that it has generated – inter alia, in terms of economic growth instability, terms of trade instability, inflation volatility and public expenditure instability – are likely to result in severe tax revenue losses. Governments in both developed and developing countries would surely learn from the management of this crisis so as to prepare for possible future economic, financial and health crises with a view to dampening their adverse macroeconomic effects, including here their negative tax revenue effects. Originality/value To the best of the author’s knowledge, this topic is being addressed in the empirical literature for the first time.

Reinterpreting museums’ intended experience during the COVID-19 pandemic: insights from Italian University Museums

ABSTRACT This paper explores whether and how University Museums reinterpreted their intended experience during the COVID-19 pandemic shock. To this end, theoretical insights from the service management literature are used. Adopting an interpretative approach, this paper relies on legislative documents and a survey of Italian University Museums during the COVID-19 lockdown. Results highlight how digital technologies enabled Italian University Museums to design service offerings and value co-creation practices. Particularly, digital technologies have led Italian University Museums, as experience-centric service organisations, to reinterpret their intended experience. This research sheds light on how museums can adapt their traditional interpretation of design areas by redefining content and the interaction with their visitors through digital technologies, ultimately building a virtual interpretation of their intended experience. This allows building a conceptual model that emphasises the differentiation between synchronous (online) and asynchronous (offline) value co-creation practices. Finally, this paper adds practical insights for managing museums’ co-creation practices virtually.

Review of the Philippine Economic Situation and Analysis of the State of the Nation in 2021

At the start of its term, the Duterte administration reaped the benefits of the Philippines’ momentum of economic growth and poverty reduction; the country’s GDP continued to expand at above six percent during the 2016 to 2019 period while poverty incidence significantly declined to 16 percent in 2018. The government’s economic strategy was founded on the expansion of the national infrastructure program popularly known as the Build-Build-Build, funded by additional public revenues brought about by the Tax Reforms for Acceleration and Inclusion which it planned to further accelerate the country’s growth path. However, the COVID-19 pandemic shock in 2020 has dented this trajectory and impaired the short-run prospects of the country; at the same time, the lack of a robust fiscal response to the social and economic impacts of the pandemic may have further diminished the ability of the country to immediately continue its pre-pandemic growth trajectory. This paper illustrates the current economic situation in the country and lays down key recommendations for the final year of the Duterte administration.

The impact of COVID-19 on economic growth: evidence from a Bayesian Panel Vector Autoregressive (BPVAR) model

ABSTRACT This paper explores the impact on the macroeconomy for certain OECD economies exposed to the COVID-19 pandemic shock. The analysis employs a panel of OECD countries, spanning the period March 2020 to January 2021. It also uses two proxies for the COVID-19 shocks: i) total confirmed incidences/cases and ii) total deaths while using the Bayesian Panel Vector Autoregressive (BPVAR) method. The findings document that the COVID-19 shock exerts a strong negative effect on industrial production. Considering how such epidemic shocks affect the expectations of economic participants, the paper questions their absence in accounting for forthcoming growth-related incidences.

Economic policy uncertainty, COVID-19 lockdown, and firm-level volatility: Evidence from China

To explain how firm-level volatility responds to the COVID-19 pandemic shock through the economic policy uncertainty (EPU) channel, we examine the two-dimension variations of stock volatility under the impact of COVID-19 pandemic and two types of EPU: measured by comprehensive newspapers news and financial newspapers news. The results, based on a difference in difference (DID) estimation, suggest a significant additional increase in the volatility of stocks with a higher degree of sensitivity to EPU after the announcement of the COVID-19 pandemic lockdown. Moreover, this effect is most pronounced for consumer, less-profitable, and high leverage stocks. Further multi-period analyses indicate that the impact of EPU associated with pandemic takes effect at the time of lockdown announcement and persist for a short-term trend.

Time-varying co-movement analysis between COVID-19 shocks and the energy markets using the Markov Switching Dynamic Copula approach

The spread of the COVID-19 pandemic in 2020 has contributed a large impact on various economic sectors and the energy sector is no exception. In this paper, we analyze the time-varying correlation between COVID-19 shocks (positive and negative) and energy markets (natural gas, gasoil, heating oil, coal, and crude oil) in the time-varying environment. This study adds to the literature by implementing the Markov-switching dynamic copula with Student-t distribution to explore the unexpected COVID-19 pandemic shock effects on energy markets. Our results revealed that (i) there is evidence of correlation between COVID-19 shocks and all energy markets; (ii) the contributions of COVID-19 shocks on energy markets are not constant along 2020. (iii), there is evidence of a similar response of the energy markets to the positive and negative COVID-19 shocks.

The impact of COVID-19 pandemic shock on major Asian stock markets: evidence of decoupling effects

Introduction. Despite the start of the outbreak of the virus (COVID-19) was in December 2019, stock markets did not respond immediately as there was little information about the expected duration of the crisis and whether China would be able to contain it within a short period of time, and the risks entailing to the global economy due to the virus spread becoming pandemic that endanger the global health situation. As a result of the great uncertainty that prevailed among investors in the third week of February, stock markets around the world incurred trillions of US dollars in losses in a single week (ending February) seen as the worst week for financial markets since the 2008 global financial crisis. The initial purpose of this paper is to assess the reaction of major Asian stock markets to the early outbreak of COVID-19 pandemic and its spillover effects among these markets. Material and methods. To capture switching behavior of major Asian stock markets due to the early outbreak of COVID-19, the paper uses daily price indexes of Shanghai composite, Hong Kong, Nikkei 225, and Korea stock market, during the period from December 2, 2019 to March, 13,2020. Markov switching dynamic regression (MSDR) employed to assess the behavior of each market to the response of the other markets’ behavior. Results. Our finding indicate evidence of two states that distinguish the behavior of the stock markets during the early outbreak of the pandemic. In state 1, when the significance of the pandemic was not fully realized there was a strong link and influence between these markets, but in state 2, when the scale and size of the pandemic realized these markets displayed decoupling behavior. Results also indicate, Hong Kong and Nikkie stock markets were the epicenter in both states. The impact of the pandemic news on the behavior of these markets as indicated by the transition probabilities of state 2, varied from 3 days duration effect (Hong Kong) to 3month duration effect (Nikkei 225). Discussion and conclusions. The interactive association between these stock markets is important for investors as well as for policy-makers. Increasing departure of stock prices from their fundamental driver, that is the common economic bonds linking these markets, implies increasing risk for investors in these stock markets. The duration of the shock as indicated by the transition probabilities show that Hong Kong stock exchange was the most resilient in the group, while Nikkei was the most reactive to the pandemic shock.

Bend or break? Small business survival and strategies during the COVID-19 shock

This manuscript studies the impact of the exogenous COVID-19 pandemic shock on small businesses in the United States. We provide early evidence on how small business owners were affected by COVID-19 and the implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. We collected online survey data from a national sample of 463 small business owners across the United States. The survey was conducted in June 2020, eight weeks after the passage of the CARES Act and the Paycheck Protection Program and Health Care Enhancement Act. The survey data include information about business characteristics, financial well-being, current response to the crisis, beliefs about the future of their business survival, and the business-owning family demographic information. There are three main themes that emerge from the results. First, drivers of income loss were not necessarily associated with time to recovery. Second, businesses that were undercapitalized were more likely to suffer higher income loss, longer time to recovery, and less likely to be resilient. Resilient was operationalized as a scale merging perceived success, potential for growth, and perceived profitability. Third, business model changes were necessary due to the pandemic but not all adaptive strategies led to better business outcomes. The results from this research study will lead to a better understanding of key vulnerabilities and adjustments that small businesses make to fully recover from economic shocks.

How Does the Market React to Corporate Philanthropic Behavior? —evidence from the COVID-19 Pandemic Shock

ABSTRACT Based on 1,130 listed Chinese firms’ charitable donation data during the COVID-19, this paper used the Event Study to examine market reactions to the epidemic and utilized OLS and Heckman two-stage models to investigate the impact of charitable donations on corporate market performance. Results show that greater corporate charitable material and medical donations result in more favorable short-term market reaction but weaker in the long term. Moreover, the low-leveraged, non-pharmaceutical, and non-SOEs can obtain better short-term performance through philanthropic donations. Findings suggest that the negative market sentiment from the COVID-19 cannot be offset by the short-term positive effects of corporate donations.

The rise and fall of global health issues: an arenas model applied to the COVID-19 pandemic shock

BackgroundThe global health agenda is ill-defined as an analytical construct, complicating attempts by scholars and proponents to make claims about the agenda status of issues. We draw on Kingdon’s definition of the agenda and Hilgartner and Bosk’s public arenas model to conceptualize the global health agenda as those subjects or problems to which collectivities of actors operating nationally and globally are paying serious attention at any given time. We propose an arenas model for global health agenda setting and illustrate its potential utility by assessing priority indicators in five arenas, including international aid, pharmaceutical industry, scientific research, news media and civil society. We then apply the model to illustrate how the status of established (HIV/AIDS), emergent (diabetes) and rising (Alzheimer’s disease) issues might be measured, compared and change in light of a pandemic shock (COVID-19).ResultsCoronavirus priority indicators rose precipitously in all five arenas in 2020, reflecting the kind of punctuation often caused by focusing events. The magnitude of change varied somewhat by arena, with the most pronounced shift in the global news media arena. Priority indicators for the other issues showed decreases of up to 21% and increases of up to 41% between 2019 and 2020, with increases suggesting that the agenda for global health issues expanded in some arenas in 2020— COVID-19 did not consistently displace priority for HIV/AIDS, diabetes or Alzheimer’s disease, though it might have for other issues.ConclusionsWe advance an arenas model as a novel means of addressing conceptual and measurement challenges that often undermine the validity of claims concerning the global health agenda status of problems and contributing causal factors. Our presentation of the model and illustrative analysis lays the groundwork for more systematic investigation of trends in global health agenda setting. Further specification of the model is needed to ensure accurate representation of vital national and transnational arenas and their interactions, applicability to a range of disease-specific, health systems, governance and policy issues, and sensitivity to subtler influences on global health agenda setting than pandemic shocks.

COVID-19 pandemic and connectedness across financial markets

Purpose This study aims to estimate the time–frequency connectedness among global financial markets. It draws a comparison between the full sample and the sample during the COVID-19 pandemic. Design/methodology/approach The study uses the connectedness framework of Diebold and Yilmaz (2012) and Barunik and Krehlik (2018), both of which consider time and frequency connectedness and show that spillover is specific to not only the time domain but also the frequency (short- and long-run) domain. The analysis also includes pairwise connectedness by making use of network analysis. Daily data on the MSCI World Index, Barclays Bloomberg Global Treasury Index, Oil future, Gold future, Dow Jones World Islamic Index and Bitcoin have been used over the period from May 01, 2013 to July 31, 2020. Findings This study finds that cryptocurrency, bond and gold are hedges against both conventional stocks and Islamic stocks on average; however, these are not “safe havens” during an economic crisis, i.e. COVID-19. External shocks, such as COVID-19, strengthen the return connectedness among all six financial markets. Research limitations/implications For investors, the study provides important insights that during external shocks such as COVID-19, there is a spillover effect, and investors are unable to hedge risk between conventional stocks and Islamic stocks. These so-called safe haven investment alternatives suffer from the similar negative impact of systemic financial risk. However, during an external shock such as COVID-19, cryptocurrencies, bonds and gold can be used to hedge risk against conventional stocks, Islamic stocks and oil. Moreover, the findings imply that by engaging in momentum trading, active investors can gain short-run benefits before the market processes any new information. Originality/value The study contributes to the emergent literature investigating the connectedness among financial markets during the COVID-19 pandemic. It provides evidence that the return connectedness among six global financial markets, namely, conventional stocks, Islamic stocks, bond, oil, gold and cryptocurrency, is extremely strong. From a methodological standpoint, this study finds that COVID-19 pandemic shock has a significant short-run impact on the connectedness among financial markets.

Resilience of commercial banks of Bangladesh to the shocks caused by COVID-19 pandemic: an application of MCDM-based approaches

PurposeThe purpose of this study is to analyze and forecast the financial sustainability and resilience of commercial banks of Bangladesh in response to the negative effects of COVID-19 pandemic.Design/methodology/approachEighteen publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as a sample for this study. To measure the riskiness of banks' credit portfolio, nine industries of DSE have been considered to determine probable loss of revenue arising from the COVID-19 pandemic shock. Moreover, two commonly used multiple-criteria-decision-making (MCDM) tools namely TOPSIS method and HELLWIG method have been used for analyzing the data.FindingsBased on the performance scores under TOPSIS and HELLWIG method, banks are categorized into three groups (six banks each) namely top resilient, moderate resilient and low resilient. It is found that EBL and DBBL are the most resilient banks, and ONEBANK is the worst resilient bank in Bangladesh in managing the COVID-19 pandemic shock.Research limitations/implicationsThis study concludes that banks with low capital adequacy, low liquidity ratio, low performance and higher NPLs are more vulnerable to the shocks caused by the COVID-19 pandemic. The management of commercial banks should emphasize on maintaining higher capital base and reducing default loans.Originality/valueResilience of the Bangladeshi banking sector under any adverse economic event has been examined by only using stress testing approach. This study is empirical evidence where both TOPSIS and HELLWIG MCDM methods have been used to make the result conclusive.

House price index (HPI) and Covid-19 pandemic shocks: evidence from Turkey and Kazakhstan

PurposeThis paper aims to investigate asymmetric pricing behaviour and impact of coronavirus (Covid-19) pandemic shocks on house price index (HPI) of Turkey and Kazakhstan.Design/methodology/approachMonthly HPIs and consumer price index (CPI) data ranges from 2010M1 to 2020M5 are used. This study uses a nonlinear autoregressive distributed lag model for empirical analysis.FindingsThe findings of this study reveal that the Covid-19 pandemic exerted both long-run and short-run asymmetric relationship on HPI of Turkey while in Kazakhstan, the long-run impact of Covid-19 pandemic shock is symmetrical long-run positive effect is similar in both HPI markets.Research limitations/implicationsThe main limitations of this study are the study scope and data set due to data constraint. Several other macroeconomic variables may affect housing prices; however, variables used in this study satisfy the focus of this study in the presence of data constraint. HPI and CPI variables were made available on monthly basis for a considerably longer period which guaranteed the ranges of data set used in this study.Practical implicationsDespite the limitation, this study provides necessary information for authorities and prospective investors in HPI to make a sound investment decision.Originality/valueThis is the first study that rigorously and simultaneously examines the pricing behaviour of Turkey and Kazakhstan HPIs in relation to the Covid-19 pandemic shocks at the regional level. HPI of Kazakhstan is recognized in the global real estate transparency index but the study is rare. The study contributes to regional studies on housing price by bridging this gap in the real estate literature.

Reflections on University Education in Uganda and the COVID-19 Pandemic Shock: Responses and Lessons Learned

The reflections in this article are drawn from a study "Investing in Data and Evidence to Inform Education Policy in Response to The New Normal Caused by Covid 19 Pandemic in Uganda." The study investigated how the various education stakeholders fitted into "the new normal" in accordance to the tripartite university roles namely: Teaching and learning, research and Community engagements / networking. A multiple case study approach informed this largely qualitative inquiry. Online interviews, and documentary reviews were used to generate the study narratives. Data analysis followed a more descriptive approach of coding of key words, and phrases in order to pinpoint common responses. Using a reflective approach, the article answers the following questions: How did the various university stakeholders respond to the COVID-19 Pandemic lock down? Are African (Uganda Universities) in particular prepared to positively encounter or take advantage unforeseen shocks? What strategies can we suggest to mitigate the plethora of pedagogical challenges created by the COVID-19 Pandemic shock? What will be the future of University Education after the COVID-19 Pandemic lock down? The implication of the study finding is that there is need to re-evaluate education/university funding as well as the need to integrate blended pedagogy at levels of education in Uganda more especially at university level. [End Page 17]

Banks' Liquidity Management During the COVID-19 Pandemic

How banks managed the COVID-19 pandemic shock? The eruption of the financial crisis in 2007 evolved to a crisis of banks as liquidity providers (Acharya and Mora, 2015). The COVID-19 pandemic shock was associated with a surge in households’ deposits and a subsequent liquidity injection by the Federal Reserve. We show how the pandemic affected banks’ liquidity management and therefore by extension, the creation of new loans. We empirically evaluate the creation and management of banks’ liquidity through three well established mechanisms: market discipline (supply-side), internal capital markets (demand-side), and the balance-sheet mechanism which captures banks’ exposure to liquidity demand risk. We provide novel empirical evidence showing that households increased savings as a precaution against future declines in their income. Also, depositors did not discipline riskier banks, and the internal capital market mechanism was not in work during the pandemic. Hence, weakly-capitalized banks were not forced to offer higher deposit rates to stem deposit outflows. Furthermore, weakly-capitalized banks increased lending in the first phase of the pandemic, while in the midst of the pandemic, they cut back new lending origination and increased their exposure to Fed’s liquidity facilities. Well-capitalized banks on the other hand, increased lending in line with the increase in their deposits. Banks with higher exposure to liquidity risk were vulnerable to deposit outflows and increased their exposure in Fed’s liquidity facilities significantly more than low-commitments exposed banks.

Urban Growth and Convergence Dynamics after COVID-19

Internet and near-instant communication services have had a strong impact on the way people communicate and exchange information since the end of the 1990s. The COVID-19 pandemic shock is likely to provide a dramatic boost to this phenomenon. In the world that will emerge from lockdown, digital communication and videoconferencing will be integral part of daily working and social life to a much higher extent than before. This will have a disproportionally strong impact on knowledge based activities, and therefore on research. This paper presents a theoretical model of endogenous economic growth with the aim of providing hints on the possible consequences of the COVID-19 pandemic shock on income per capita growth and disparities within a system of integrated urban areas. In the model, abstract technological knowledge flows at no cost across space. In contrast, flows of tacit knowledge arise from the interaction between researchers and hence tends to be hampered by distance. Within this framework, the diffusion of broadband technology, high-speed connections and videoconferencing takes the form of a reduction of the “cost of distance” for flows of tacit knowledge. This reinforces productive specialization that, in turn, yields an increase in the system-wide, common growth rate and an increase in income per capita disparities across areas. On the other hand, social distancing is likely to yield an asymmetric negative impact on the productivity of urban research systems thus leading to a decrease in the growth rate.

Medium- vs. Short-Term Consumer Inflation Expectations: Evidence from a New Euro Area Survey

Using the ECB Consumer Expectations Survey, this paper investigates how consumers revise medium-term inflation expectations. We provide robust evidence of their adjustment to the current economic developments. In particular, consumers adjust medium-term inflation views in response to changes in short-term inflation expectations and, to a lesser degree, to changes in perceptions of current inflation. We find that the strong adverse Covid-19 pandemic shock contributed to an increase in consumer inflation expectations. We show that consumers who declare high trust in the ECB adjust their medium-term inflation expectations to a lesser degree than consumers with low trust. Our results increase understanding of expectations formation, which is an important issue for medium-term oriented monetary policy.

Does the COVID-19 Pandemic Shock Change the Reservation Wage?

The COVID-19 pandemic can change the reservation wage because of changes in people’s preferences due to the risk of infection, the rapid rise of work at home, or a worsened household economy. Furthermore, the changing reservation wage changes the decision to work, especially for the second wage earner. This study examines the effect of the pandemic shock on the reservation wage using the difference-in-differences method and Japanese data about job seekers’ desired wage. We find that after the first wave of the pandemic, the reservation wages for part-time (full-time) job increase (decrease) in urban prefectures. Especially, the reservation wages for part-time managerial (construction and mining) occupations increase (decrease). These managerial jobs include managing shops like restaurants and bars, where it is difficult to maintain sales during pandemic and a high risk of infection exists. People may not prefer these aspects. In contrast, the pandemic shock worsened the household economy. This may decrease the reservation wage in jobs where money is received instantly, such as part-time construction and mining jobs. Finally, contrary to our expectation, the reservation wage of professional jobs that seem to be familiar with work at home does not decrease. Furthermore, the decrease in reservation wages in the prior period increases the labor market participation rate.