The researchers were able to use long-term interest rate data and other sources to look at the economic impact of 12 pandemics, finding 'significant macroeconomic after-effects' from pandemics that lasted for 40 years.
The University of California economists, Sanjay Singh, Alan Taylor and Oscar Jorda looked at some of the worst pandemics in history and their impact on interest rates.
There's a long history of research showing particularly deep recessions caused by financial crises, such as the 2008-09 global financial crisis, can depress interest rates and general economic activity for up to 10 years. But the researchers found in the wake of pandemics which kill large numbers of people, the economic impacts linger for much longer.They said pandemics are followed by extended periods of falling investment, which keeps downward pressure on interest rates, while survivors have a heightened desire to save as they seek to rebuild lost wealth or protect themselves for future turmoil.
Pandemics have a much different impact than wars. Post-war reconstruction boosts economies and pushes up interest rates.
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