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Pandemic panic? Effects of health system capacity on firm confidence during COVID-19

Author

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  • Gopalakrishnan, Balagopal
  • Lim, Jamus Jerome
  • Mohapatra, Sanket

Abstract

We examine whether firms’ business confidence – defined as their perceptions of risk and sentiment associated with the COVID-19 pandemic – is affected by ex ante health system capacity and ex post government responses. Using firm-level data from 53 countries, we find that ex ante proactive measures, such as healthcare spending and the availability of medical staff, favorably impact firms’ confidence. This effect is, however, moderated by the COVID-19 case load. We also find that the ex post reactive measures, such as health and containment actions and the overall quality of the government response, also bolster business confidence. These effects on confidence vary by firm size and the level of development of the economy, but are largely impervious to prior epidemic experience.

Suggested Citation

  • Gopalakrishnan, Balagopal & Lim, Jamus Jerome & Mohapatra, Sanket, 2024. "Pandemic panic? Effects of health system capacity on firm confidence during COVID-19," European Journal of Political Economy, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:poleco:v:84:y:2024:i:c:s0176268023000666
    DOI: 10.1016/j.ejpoleco.2023.102422
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    More about this item

    Keywords

    Health system capacity; COVID-19; Private and public healthcare; Firm sentiment and risk; Textual analysis;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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