Fraser Summerfield, Livio Di Matteo: Influenza Pandemics and Macroeconomic Fluctuations in Recent Economic History, in: CCHE/CCES Working Paper No. 210,002 (March, 2021).
COVID-19 and the associated economic disruption is not a unique pairing. Catastrophic health events including the ‘Black Death’ and the ‘Spanish Flu’ also featured major economic disruptions. This paper focuses on significant health shocks during 1870-2016 from a singular virus: influenza. The analysis of Summerfield and Di Matteo builds on a literature dominated by long-run analyses by documenting the causal impact of influenza pandemics on short-run macroeconomic fluctuations. The authors examine 16 developed economies combining the Jordà-Schularick-Taylor Macro History Database with the Human Mortality Database. Their results reveal important negative impacts. Further, Summerfield an Di Matteo illustrate that these effects operate through different channels over time. Prior to vaccines, pandemic-induced mortality was responsible for economic contractions while modern flu-induced cycles appear to arise because of pandemic-induced consumption decreases.