Muhammed A. Yildirim

Koç University

E-Mail: mayildirim@ku.edu.tr
Institutional Affiliations: Koç University and Center for International Development at Harvard University

NBER Working Papers and Publications

May 2020COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows
with Cem Çakmaklı, Selva Demiralp, Ṣebnem Kalemli-Özcan, Sevcan Yesiltas: w27191
We quantify the macroeconomic effects of COVID-19 for emerging markets using a SIR-multisector-small open economy model and calibrating it to Turkey. Domestic infection rates feed into both sectoral supply and sectoral demand shocks. Sectoral demand shocks also incorporate lower external demand due to foreign infection rates. Infection rates change endogenously with different lockdown policies. To calibrate the model, we use indicators of physical proximity and tele-workability of jobs to measure supply shocks. We use real-time credit card purchases to pin down demand shocks. Our results show that the optimal policy, which yields the lowest economic cost and saves the maximum number of lives, can be achieved under a full lockdown of 39 days. Partial and/or no lockdowns have higher economic...

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