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Pandemic outbreak in a developing country: the relevance of foreign aid into the sustained economic growth
Última modificación: 2021-08-10
Resumen
We develop a neoclassical growth model introducing a Richard production function to describes the effects of pandemic and infectious diseases, the model brings out multiple equilibrium. Depending on initial capital, fiscal policy, and public spending on health, there exist four possible scenarios. In all of them, the pandemic and infectious diseases reduces the equilibrium level. Moreover, for a developing country with a low spending in prevention, or even less spending to control or eradicate the pandemic, leads into a poverty trap. On the other hand, the model highlights that foreign aid aimed to control or reduces the spread diseases, nudge to overcome the poverty trap.
Palabras clave
Pandemic; Economic growth; Richard function; Multiple equilibria; Poverty trap