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The road to economic recovery: pandemics and innovation

Lipeng, Wang and Mengyu, Zhang and Verousis, Thanos (2021) 'The road to economic recovery: pandemics and innovation.' International Review of Financial Analysis. ISSN 1057-5219

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Abstract

In this paper, we investigate the economic consequences of pandemics from an idea-based theory of economic growth. We assume that pandemics pose a threat to research productivity and analyse the long-term consequences of pandemic shocks to innovation output. We demonstrate that following a pandemic, innovation output is disrupted for approximately seven years. The effect of pandemic shocks on innovation output varies between countries, and sector to sector regarding economic activity. Pandemic shocks lead to a short-term drop in the number of patent applications. Crucially, the duration of a pandemic has a strong effect on innovation output. Overall, the effects of this most recent pandemic on future innovation output, and subsequently on growth,are expected to be felt long into the future. This paper supports the policies designed to reduce the effect of the “Great Lockdown” on research productivity. Policies that target the more innovative firms are moving in the right direction in terms of reducing the time it will take for innovation to recover from the effects of COVID19.

Item Type: Article
Uncontrolled Keywords: Innovation, pandemic, Local projection, COVID-19
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
Depositing User: Elements
Date Deposited: 03 Mar 2021 08:11
Last Modified: 12 Mar 2021 13:15
URI: http://repository.essex.ac.uk/id/eprint/29904

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