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Clustering Macroeconomic Impact of Covid-19 in OECD Countries and China

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  • Bige Küçükefe

Abstract

The coronavirus pandemic (COVID-19) has caused the biggest economic contraction in global economy since the Second World War. COVID-19 pandemic has forced governments to take unprecedented measures to prevent the spread and to protect their economies that presented a dilemma because of their conflicting outcomes. This paper investigates the presumption of health-economy trade-off due to COVID-19 by comparing the GDP declines and deaths in per million population in OECD countries and China. The empiric data shows the countries with the highest death rates have seen the largest economic downturns. The clustering analysis by using k-means algorithm finds that there are three partitions of countries for current account balances, GDP growth rate, and deaths in per million population. The countries with current account surpluses above 2.5% of GDP managed to limit their GDP decline below -15% and are in the same cluster. On the other hand, the countries with higher death rates and current account deficits group another cluster and saw GDP declines as above 15% except for USA and Brasil.

Suggested Citation

  • Bige Küçükefe, 2020. "Clustering Macroeconomic Impact of Covid-19 in OECD Countries and China," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 5(SI), pages 280-291.
    • Handle: RePEc:ahs:journl:v:5:y:2020:i:si:p:280-291
    DOI: 10.30784/epfad.811289
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    References listed on IDEAS

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    1. Tisdell, Clement A., 2020. "Economic, social and political issues raised by the COVID-19 pandemic," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 17-28.
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    More about this item

    Keywords

    Clustering; K-Means clustering; Regression Analysis; COVID-19;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • I10 - Health, Education, and Welfare - - Health - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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