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A shot for the US economy

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  • Gächter, Martin
  • Huber, Florian
  • Meier, Martin

Abstract

While previous literature examines the effects of increasing COVID-19 incidences and fatality rates on economic activity, the impact of vaccination roll-outs on public health and the economy is not yet well understood. We examine the effect of a vaccination shock in the United States on various pandemic and economic indicators. By employing a BVAR model to overcome the short data sample, we show that an increase in vaccinations is not only associated with declining incidences, reproduction and fatality rates, but also increases mobility, which dampens the effect on public health indicators in the medium term. With respect to the economy, a vaccination shock is associated with lower unemployment, higher GDP growth and also reduces uncertainty in financial markets.

Suggested Citation

  • Gächter, Martin & Huber, Florian & Meier, Martin, 2022. "A shot for the US economy," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005730
    DOI: 10.1016/j.frl.2021.102638
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    More about this item

    Keywords

    Bayesian VAR; Vaccinations; COVID; Unemployment; GDP;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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