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The Road to Economic Recovery: Pandemics and Innovation

Wang, Lipeng, Zhang, Mengyu, Verousis, Thanos (2021) The Road to Economic Recovery: Pandemics and Innovation. International Review of Financial Analysis, 75 . Article Number 101729. ISSN 1057-5219. (doi:10.1016/j.irfa.2021.101729) (KAR id:86821)


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
DOI/Identification number: 10.1016/j.irfa.2021.101729
Uncontrolled keywords: Innovation, pandemic, Local projection, COVID-19
Subjects: H Social Sciences > HB Economic Theory
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Depositing User: Mengyu Zhang
Date Deposited: 28 Feb 2021 16:24 UTC
Last Modified: 27 Oct 2023 13:16 UTC
Resource URI: (The current URI for this page, for reference purposes)

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