Influenza pandemics and macroeconomic fluctuations 1871-2016

Cliometrica (Berl). 2023 May 29:1-47. doi: 10.1007/s11698-023-00269-w. Online ahead of print.

Abstract

This paper documents the short-run macroeconomic impacts of influenza pandemics across 16 countries spanning 1871-2016 using the Jordà-Schularick-Taylor Macrohistory Database and the Human Mortality Database. We find pandemic-induced mortality contributed meaningfully to business cycle fluctuations in the post 1870 era. We identify negative causal impacts on the cyclical component of GDP using pandemics to instrument for working-age mortality. The analysis of short-run economic outcomes extends literature dominated by long-run economic growth outcomes and case studies of several specific health shocks such as the Black Death, Spanish Flu or COVID-19. Our findings illustrate that less catastrophic pandemics still have important economic implications.

Keywords: Business cycles; GDP fluctuations; Health shocks; Mortality; Pandemics.