Determinants of the Fiscal Support of Governments in Response to the COVID-19 Pandemic

Abstract

Fiscal support measures have different implications for public finances in the near term and beyond the COVID-19 pandemic. For this purpose, this paper examines the determinants of governments' fiscal support in response to the COVID-19 pandemic. The empirical analysis is based on the cross-sectional data estimations from 129 developed and developing countries. The estimation results indicate that a higher level of uncertainty related to COVID-19 (measured by the World Pandemic Uncertainty Indices) is positively related to fiscal support. Besides, countries with a higher total population and population over 65 years and older provide higher fiscal support. These results are valid when considering the developed countries separately. Policy implications for public finances during the COVID-19 pandemic are also discussed.

Keywords: COVID-19 pandemic; COVID-19 uncertainty; fiscal support; response to the COVID-19 pandemic; world pandemic uncertainty indices.