The COVID-19 pandemic: theoretical scenarios of its socioeconomic impacts in Latin America and the Caribbean

Vol. 40 No. 4 (2020)

Oct-Dez/2020
Published October 23, 2020
PDF-English
PDF-English

How to Cite

Lanchimbra, Cintya, Andrea Bonilla-Bolaños, and Juan Pablo Díaz-Sánchez. 2020. “The COVID-19 Pandemic: Theoretical Scenarios of Its Socioeconomic Impacts in Latin America and the Caribbean”. Brazilian Journal of Political Economy 40 (4):622-46. https://doi.org/10.1590/0101-31572020-3199.

The COVID-19 pandemic: theoretical scenarios of its socioeconomic impacts in Latin America and the Caribbean

Cintya Lanchimbra
Associate Professor. IDEA Research Group, Department of Quantitative Economics, Escuela Politécnica Nacional, Quito, Ecuador & Institut de Recherche en Gestion et Economie, Université de Savoie Mont Blanc (IREGE/IAE Savoie Mont Blanc), Annecy, France.
Andrea Bonilla-Bolaños
Assistant Professor. IDEA Research Group, Department of Quantitative Economics, Escuela Politécnica Nacional, Quito, Ecuador &. CNRS, GATE Lyon-St Etienne, UMR n° 5824 Université de Lyon, France.
Juan Pablo Díaz-Sánchez
Associate Professor. IDEA Research Group. Department of Quantitative Economics, Escuela Politécnica Nacional, Quito, Ecuador
Brazilian Journal of Political Economy, Vol. 40 No. 4 (2020), Oct-Dez/2020, Pages 622-646

Abstract

This paper provides some theoretical scenarios the socioeconomic impacts caused by the COVID-19 pandemic for the Latin America and the Caribbean (LAC). To do so, after a brief literature review of previous pandemics, we use the macro and microeconomic theory, together with aggregated data, in order to provide expected implications of the COVID-19 pandemic for the LAC region. At a macroeconomic level, we explain how the COVID-19 shock is causing both aggregate supply and aggregate demand to reduce so plunging the region into a recession and why such a recession is dangerously harmful for the LAC economies. At a micro level, we describe why some enterprises would adapt to remain in the market or even growth; by contrast, some of them would leave the market in the short term. For the consumers, the impact of this sanitary crisis is related to the change in their preferences and household members’ relations due to extended quarantines.

JEL Classification: D10; D20; D84; E10; F22.


Keywords: Latin America and the Caribbean COVID-19 socioeconomic implications