Economic and Financial Consequences of Pandemics

Abstract

This paper studies the medium-term economic consequences of major pandemics since 1870. The paper compares the average path of economic and financial indicators after a pandemic with their long-term path. According to data, inflation is low over the decade that follows the end of a major pandemic. Investments drive the rebound in real GDP. Financial assets provide above-average real returns. Credit markets experience a boom while fiscal and monetary authorities cutback government expenditure and money supply after pandemics.