The theoretical and empirical literature on the impacts of pandemics originates from empirical work on global pandemics episodes such as the Spanish flu in 1918-20, SARS in 2003, MERS in 2012, among others. Varieties of this strand of economic research have recently expanded due to the ongoing COVID-19 pandemic. This section focuses on a brief literature review of the growth effects from COVID-19 across developing countries.

An assessment of the economic contraction and mortality during the Great Influenza Pandemic of 1918-20 is provided by Barro, Ursúa, and Weng (2020). Using data for 48 countries, the authors estimate that about 2.1 percent of the total population may have died due to the Spanish influenza. Contractions in economic activity and consumption for the median country were estimated at 6 and 8 percent, respectively. Additional evidence shows that the economic disruption associated with the 1918-20 Great Influenza pandemic could be mitigated by the implementation of nonpharmaceutical interventions (NPI) such as social distancing.<sup>5</sup> Recent evidence documents the impact on economic activity of five recent global pandemic and epidemic episodes in the twenty-first century; namely, Severe Acute Respiratory Syndrome (SARS) in 2003, Swine Flu (H1N1) in 2009, Middle East Respiratory Syndrome (MERS) in 2012, Ebola in 2014, and Zika in 2016.<sup>6</sup> When looking at the distribution of growth rates among two groups of countries (disease at the onset year of all affected countries vis-à-vis countries in nondisease years and unaffected countries in disease years), the evidence shows that: (i) the average growth rate of economic activity in country-year pairs unaffected by the crisis is 3.96 percent, and it slows to an average rate of 0.77 percent during pandemic episode years; (ii) the distribution of growth rates is left-skewed during pandemic years (reflecting negative outcomes) while that of non-pandemic country years is right-skewed.<sup>7</sup> Panel evidence from 210 countries from 1960 to 2018 shows that the global impact of a pandemic on economic activity is negative and persistent.<sup>8</sup> For instance, the average output loss is about 2.6 percent for all countries at the onset of the pandemic, and it is still 3 percent below the prepandemic level five years later. Among the five previously identified epidemic episodes, the global output loss from H1N1 is somewhat larger (4 percent in the year of the outbreak, and 4.3 percent after five years).<sup>9</sup> Note that these estimates tend to be surrounded by uncertainty from the unknown timing, spread, and severity of the virus.

McKibbin et al. (2020) quantify the potential global economic costs of COVID-19 under different possible scenarios. They also show the economic benefits of globally-coordinated policy responses to tame the virus using the global macroeconomic model (G-Cubed) based on McKibbin and Triggs (2018). The model has six sectors and 24 countries, which is extended from McKibbin and Wilcoxen (1999, 2013). There are short-term and long-term policy responses for the COVID-19 pandemic. In the short term, central banks need to support the economies during the ongoing

> 5 See Correia, Luck and Verner (2020).

> 6 The five episodes were identified by Jamison et al. (2017).

> 7 See Ma, Rogers, and Zhou (2020a).

> 8 Furceri et al. (2020) show that modern pandemics—although smaller in the magnitude of infections and deaths than the COVID-19 pandemic—have led to greater income inequality with higher Gini coefficients, and lower employment-to-population ratio for people with basic education as opposed to those with higher education. 9 See Ma, Rogers, and Zhou (2020b).

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