This study suggests that an adequate level of social capital with a robust
health profile might be associated with positive policy outcomes in combating
COVID-19. We investigate the effect of interaction between fiscal policy
responses and social capital on the spreading of the pandemic, by considering
the country health profile, demographic and economic factors, in a
cross-section of 94 countries. Firstly, the results of the analysis indicate
the moderating effect of social capital on keeping the pandemic under control
through fiscal policy measures. In particular, strong bilateral and family
ties as well as better coordination and cooperation at the community level
can facilitate the goal of fiscal policy measures. The results also reveal
that the declining effect of fiscal policy on the pandemic mostly arises from
the relatively high social capital levels, while it loses its effectiveness
at low levels. Secondly, the findings emphasize the role of behavioural risk
factors, care systems and preventative interventions as prominent
determinants of surviving in pandemic. Thirdly, we conclude that taking
specific measures for identified vulnerable and high-risk groups is quite
important in overcoming the disease.
The moderating effect of social capital on fiscal policy responses to COVID-19: Cross-country evidence
