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The Impact of COVID-19 on Living Standards: Addressing the Challenges of Nowcasting Unprecedented Macroeconomic Shocks with Scant Data and Uncharted Economic Behavior

Author

Listed:
  • Nora Lustig

    (Tulane University)

  • Valentina Martinez Pabon

    (Yale University)

  • Federico Sanz

    (CEQ Institute and the World Bank)

  • Stephen Younger

    (CEQ Institute)

Abstract

We present a methodological approach with relatively low information requirements to quantify the impact of large, unprecedented macroeconomic shocks like the COVID-19 pandemic on living standards across the income distribution. The approach can be produced quickly and, contrary to other "fast-delivery" exercises, does not assume that income losses are proportional across the income distribution, a feature that is critical to understanding the impact on poverty and inequality. Our method is sufficiently flexible to refine the projected effects of the shock as more information becomes available. We illustrate with data from the four largest countries in Latin America: Argentina, Brazil, Colombia, and Mexico, and discuss the estimated effect of COVID-19 on inequality and poverty. We also present the guidelines for adapting our framework to different countries and economic shocks.

Suggested Citation

  • Nora Lustig & Valentina Martinez Pabon & Federico Sanz & Stephen Younger, 2022. "The Impact of COVID-19 on Living Standards: Addressing the Challenges of Nowcasting Unprecedented Macroeconomic Shocks with Scant Data and Uncharted Economic Behavior," Working Papers 2206, Tulane University, Department of Economics.
    • Handle: RePEc:tul:wpaper:2206
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    COVID-19; inequality; poverty; mobility; microsimulations; Latin America;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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