On the Determinants of the Fiscal Policy Response to COVID-19: Evidence from Robust Estimation and Country Outlier Detection

This paper analyzes the determinants of fiscal policies during the COVID-19 crisis. Using the robust regression MM-estimator for 180 countries we have found that GDP per capita, quantitative easing, debt to GDP ratio, trade openness and total revenue had a positive and a statistically significant impact on the fiscal policy responses, while unemployment rate and current account balance had a negative one. Furthermore, we have shown that the proportion of the population aged 65 and above had a positive influence on the size of fiscal packages. In contrast, factors such as political stability, absence of violence, and political ideology had no discernible impact on the allocation of fiscal aid. The outcomes of our findings carry substantial implications and offer valuable insights for authorities and policymakers.

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