Search

By contrasting the Great Depression and the Coronacrisis, we demonstrate that narrative economics (Shiller, 2017) is key in the analysis of economic fluctuations. We note the importance of the populist narrative to understand the economic and health outcomes of the Coronacrisis in Mexico and highlight the role of the predominance of different economic paradigms in economic policy decision-making. We suggest that, just as in 1929, by following orthodox primary fiscal balance sheet policies at the cost of contracting government investment, the Mexican economy will undergo a long and painful recovery process compared to its global peers. [ABSTRACT FROM AUTHOR]

Using eight cross-section econometric models applied to a sample of 31 countries, we find that, although the Case Fatality Ratio (CFR) of COVID-19 is explained by 'structural' variables that were given prior to the pandemic (healthcare infrastructure, comorbidities, poverty and the HDI), the 'response' variables to the crisis (fiscal support, health policy, and, above all, government narrative) have been determinant in the evolution of the pandemic. We show that the dummy variable representing populist countries is significant, demonstrating that, as Shiller (2017) stated, narrative plays a major role in shaping behavior and economic outcomes. [ABSTRACT FROM AUTHOR]