BIS国际清算银行-The-fiscal-response-to-the-Covid-19-crisis-in-advanced-and-emerging-market-economies_9页_695kb

BIS Bulletin No. 23 Summary: The Fiscal Response to the Covid-19 Crisis in Advanced and Emerging Market Economies

Core Content

This BIS Bulletin examines the fiscal policy responses of advanced economies (AEs) and emerging market economies (EMEs) to the Covid-19 crisis. It highlights the differences in the magnitude and composition of fiscal measures between these groups, and explores the underlying determinants of these disparities.

Key Takeaways

• Fiscal Policy Response: The fiscal response to the pandemic has been swift and strong, often in tandem with monetary policy.
• AEs vs. EMEs: AEs have implemented a significantly larger fiscal response than EMEs, with budgetary measures reaching 8.3% of GDP compared to 2.0% in EMEs.
• Non-Budgetary Measures: While AEs have used substantial non-budgetary measures, EMEs have limited use of such tools, mainly due to constrained fiscal space and financial conditions.
• Pandemic Incidence: Although the pandemic was more severe in AEs, the lower incidence in EMEs does not fully explain the smaller fiscal response.
• Fiscal Policy Space: EMEs face tighter fiscal policy space due to higher financing costs and limited access to external financing.
• Monetary Policy: EMEs have more room to cut interest rates than AEs, and some have started using quantitative easing, though cautiously.
• Structural Factors: Economic development and social safety nets influence the size and composition of fiscal responses, with AEs having more robust social safety nets and automatic stabilizers.

Main Findings

Composition and Size of Fiscal Packages

• Fiscal packages include both budgetary (e.g., tax cuts, subsidies) and non-budgetary (e.g., credit guarantees, funding facilities) measures.
• The size of fiscal stimulus reached 4.6% of GDP for G-20 countries by mid-May 2020.
• Budgetary measures in AEs were 8.3% of GDP, while in EMEs they were 2.0%.
• Non-budgetary measures were more significant in AEs (e.g., credit guarantees at 6.6% of GDP) compared to EMEs (0.4%).
• Variability among countries: There is a large variation in the size and composition of fiscal packages across countries.

Determinants of the Fiscal Response

Pandemic Incidence and Containment Measures

• AEs had a higher prevalence of the pandemic, with confirmed cases three times higher than in EMEs by mid-May 2020.
• Despite similar containment measures, the economic impact in EMEs may be deeper, yet their fiscal response was more limited.

Fiscal Policy Room

• Financing costs in EMEs were much higher than in AEs, constraining their fiscal response.
• Sovereign debt ratings and bond yields are key indicators of fiscal space.
• Procyclical fiscal policy in EMEs limits their ability to respond to economic downturns.
• Commodity dependence in some EMEs (e.g., oil producers) further restricts fiscal space.

Monetary Policy

• Monetary policy accommodation helps reduce financing costs for governments.
• EMEs have cut interest rates more significantly than AEs (114 basis points vs. 40 basis points).
• Some EMEs have started using quantitative easing (QE), but primarily to support market functions rather than reduce government funding costs.

Structural Factors

• Economic development and social safety nets influence the size and composition of fiscal responses.
• AEs with stronger social safety nets have smaller budgetary measures but more extensive non-budgetary measures.
• Automatic stabilizers in AEs help absorb economic shocks, reducing the need for large discretionary fiscal interventions.

Conclusion

• The global fiscal response to the pandemic has been swift and strong, but EMEs have been more limited in their actions.
• The smaller fiscal space and tighter financing conditions in EMEs are more significant factors in explaining the disparity than the pandemic's incidence.
• The analysis is a snapshot and does not account for future adjustments as the pandemic evolves and recovery efforts intensify.

References

• Alberola, E, I Kataryniuk, A Melguizo and R Orozco (2016): "Fiscal policy and the cycle in Latin America: The role of financing conditions and fiscal rules", BIS Working paper no 568.
• Arslan, Y, M Drehmann and B Hofmann (2020): "Central bank bond purchases in emerging market economies", BIS Bulletin no 20.
• Baudino, P (2020): "Public guarantees for bank lending in response to the Covid-19 pandemic", FSI Briefs no 5.
• Cavallino, P and F De Fiore (2020): "Central bank response to Covid-19 in advanced economies", BIS Bulletin no 21.
• Drehmann, M, M Farag, N Tarashev and K Tsatsaronis (2020): "Buffering Covid-19 losses - the role of prudential policy", BIS Bulletin no 9.
• Hale, T, S Webster, A Petherick, T Phillips and B Kira (2020): "Oxford COVID-19 government response tracker", Blavatnik School of Government.
• Hördahl, P and I Shim (2020): "EME bond portfolio flows and long-term interest rates during the Covid-19 pandemic", BIS Bulletin, no 18.
• IMF (2011): Fiscal monitor, November.
• IMF (2020a): Fiscal monitor, April.
• IMF (2020b): "Tracking the $9 trillion global fiscal support to fight Covid-19", IMF Blog, 20 May.
• OECD (2019): "OECD economic outlook", volume 2019, issue 2.
• Reinhart, C., K S Rogoff and M A Savastano, (2003): "Debt intolerance," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 1-74.

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