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Write the Impacts of the COVID-19 Shocks in New Zealand (~600 words)  

Use economic models and theories covered in this course (e.g. AD-AS model, neoclassical growth model, etc) to explain how the pandemic affects the demand and supply side of the economy.

TIP: ⮚ You could discuss how the government’s non-economic responses to the pandemic (e.g. social distancing, closing the borders) and how it affects the economy.

⮚ You could contrast the economic effects of different shocks (COVID-19 vs GFC/Brexit) by comparing the growth rate of different indicators (growth, GDP growth, unemployment, etc) at the ‘peak’ of the crisis.

Answer 1

The outbreak of coronavirus named COVID-19 has disrupted the Chinese economy and is spreading globally. The evolution of the disease and its economic impact is highly uncertainty In order to better understand possible economic outcomes, this paper explores seven different scenarios of how COVID-19 might evolve in the coming year using a modelling technique developed by Lee and McKibbin (2003) and extended by McKibbin and Sidorenko (2006). It examines the impacts of different scenarios on macroeconomic outcomes and financial markets in a global hybrid DSGE/CGE general equilibrium model.

The scenarios in this paper demonstrate that even a contained outbreak could significantly impact the global economy in the short run. These scenarios demonstrate the scale of costs that might be avoided by greater investment in public health systems in all economies but particularly in less developed economies where health care systems are less developed and popultion density is high.

The outbreak was triggered in December 2019 in Wuhan city in Hubei province of China. COVID- 19 continues to spread across the world. Initially the epicenter of the outbreak was China with reported cases either in China or being travelers from China.

Health Organization (WHO) has declared a public health emergency of international concern to coordinate international responses to the disease. It is, however, currently debated whether of COVID-19 could potentially escalate to a global pandemic. In a strongly connected and integrated world, the impacts of the disease beyond mortality (those who die) and morbidity (those who are incapacitated or caring for the incapacitated and unable to work for a period) has become apparent since the outbreak.

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