Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243410 
Year of Publication: 
2021
Series/Report no.: 
WIDER Working Paper No. 2021/84
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
We develop a new methodology to nowcast the effects of the COVID-19 crisis and forecast its evolution in small, export-oriented countries. To this aim, we exploit variation in financial indexes at the industry level and relate them to the expected duration of the crisis for each industry, under the assumption that the main shocks to financial prices in recent months have come from COVID-19. Starting from the latest information available on the size of the shock at the industry level, often a few months old, we predict the ensuing recovery trajectories using the most recent financial data available, monitoring how subsequent waves of infections and information about new vaccines have impacted expectations about the future. We apply our method to Viet Nam, one of the most open economies in the world, and obtain predictions that are close to (though more optimistic than) later projections by the International Monetary Fund and other international forecasters. Our claim is that this better-than-expected performance was visible in stock market data early on but was largely missed by conventional methods. The Vietnamese application hence supports the validity of our method, showing that financial information can be used to accurately nowcast recovery paths following a large economic shock such as a global pandemic.
Subjects: 
COVID-19
pandemic
economic recovery
nowcasting
financial markets
Viet Nam
JEL: 
C53
F47
G01
G17
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-024-5
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.