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Economic and Distributional Impact of COVID‐19: Evidence from Macro‐Micro Modelling of the South African Economy

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  • Margaret Chitiga‐Mabugu
  • Martin Henseler
  • Ramos Mabugu
  • Hélène Maisonnave

Abstract

A computable general equilibrium model linked to a microsimulation model is applied to assess the potential short‐term effects on the South African economy of the ongoing COVID‐19 pandemic. With a particular focus on distributional outcomes, two simulations are run, a mild and a severe scenario. The findings show significant evidence of decline in economic growth and employment, with the decline harsher for the severe scenario. The microeconomic results show that the pandemic moves the income distribution curve such that more households fall under the poverty line while at the same time, inequality declines. The latter result is driven by the disproportionate decline in incomes of richer households while the poorest of the poor are cushioned by government social grants that are kept intact during the pandemic. The COVID‐19 pandemic is still unfolding and its economic modelling as well as the data used to operationalise the model will need to be updated and improved upon as more information about the disease and the economy becomes available.

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  • Margaret Chitiga‐Mabugu & Martin Henseler & Ramos Mabugu & Hélène Maisonnave, 2021. "Economic and Distributional Impact of COVID‐19: Evidence from Macro‐Micro Modelling of the South African Economy," South African Journal of Economics, Economic Society of South Africa, vol. 89(1), pages 82-94, March.
    • Handle: RePEc:bla:sajeco:v:89:y:2021:i:1:p:82-94
    DOI: 10.1111/saje.12275
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    Cited by:

    1. Shehabi, Manal, 2022. "Modeling long-term impacts of the COVID-19 pandemic and oil price declines on Gulf oil economies," Economic Modelling, Elsevier, vol. 112(C).
    2. Martin Henseler & Hélène Maisonnave & Asiya Maskaeva, 2021. "Economic impacts of COVID-19 on the tourism sector in Tanzania," Working Papers hal-03501722, HAL.
    3. Roberto Roson & Camille Van der Vorst, 2022. "General Equilibrium Analyses of COVID-19 Impacts and Policies: An Historical Perspective," Contributions to Economic Analysis, in: The Economics of COVID-19, volume 127, pages 57-70, Emerald Group Publishing Limited.
    4. Meltem A. Aran & Nazli Aktakke & Zehra Sena Kibar & Emre Üçkardeşler, 2022. "How to Assess the Child Poverty and Distributional Impact of COVID-19 Using Household Budget Surveys: An Application Using Turkish Data," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 1997-2037, August.
    5. Ephrem Habtemichael Redda & Jhalukpreya Surujlal, 2021. "An Impact Assessment of Covid-19 on the South African Automotive Industry," Eurasian Journal of Business and Management, Eurasian Publications, vol. 9(3), pages 208-216.

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