Pandemnomics: The Pandemic's Lasting Economic Effects

Table of Contents

1. Frontmatter

2. Pandemic and Public Economy

   1. Frontmatter

   2. Chapter 1. Evaluation for COVID-19 Outbreak Public Policies in the World Within the Scope of Global Public Goods (GPGs)

      Bernur Açıkgöz

      Abstract

      Due to the global impact of the COVID-19 pandemic, states and international organizations must implement a variety of economic and financial practices to combat the pandemic and its adverse effects on the economies. These public policies require the most efficient use of resources under a serious resource scarcity. Nations must re-imagine the ways how they cooperate as they fight to COVID-19. Global public bads are public goods with costs that extend across countries, across rich and poor population groups, and even across generations. We can consider the COVID-19 pandemic as a global public bad. This chapter looks at definitions and concepts of GPGs and global public bads, and then, the public policies implemented within the scope of COVID-19 will be evaluated within this framework.

   3. Chapter 2. Global Outbreaks from a Historical Perspective and Fiscal Policy: An Analysis for COVID-19 Outbreak

      Sibel Aybarç

      Abstract

      Outbreaks that have changed the era throughout history affected the course of wars and have largely steered the destruction of economic order and understanding are the ancient desperation that the human beings have paid social, psychological, economic, and financial costs. In this section addresses, especially starting from 431 BC (Athens), the global outbreaks that have shaped the fate of people, empires, and nation states, the fiscal policy measures implemented in the fight against the epidemics, and particularly the policy measures that have been implemented in the context of combating COVID-19. The times of epidemics have made some state interventions inevitable; such as, on one hand, announcing support packages for the elimination of economic stagnation, on the other hand, health expenditures, personnel training, vaccine and treatment efforts, social security expenditures for the sustainability of public health, as a requirement of being a social state. In the last century, anticipation of an increase in epidemic diseases arising from the environmental destruction (especially due to the prevalence of plastic production, which is shown innocent due to its lightness, population growth, unbalanced urbanization, and excessive consumption habits) necessitates intervention through all policy instruments. The tax regulations that are taken rapidly during the epidemics are pragmatic-based and temporary. However, environmental sustainability can be ensured and preparation can be made for extraordinary periods such as epidemics and natural disasters, through the Pigovian taxes and environmentally friendly standards that will be applied in the ordinary periods. In addition, an Epidemic Tax, which will be set up to be applied in the usual periods, will strengthen the countries’ hand in terms of eliminating the possible risks in the first place, and on the other hand, it will create the social environment and financial awareness in the carbon-epidemic-externality spiral.

   4. Chapter 3. Increasing Public Expenditures Due to COVID-19 Pandemic Crisis: An Assessment According to Peacock-Wiseman Hypothesis

      Melih Kabayel, Alper Doğan

      Abstract

      Although the COVID-19 pandemic crisis is basically a health crisis, it does not only concern health policies due to its economic and social effects. In the fight against the pandemic, it is important to implement economic, social and financial policies as well as health policies. In this context, effectively using the public spending tools of fiscal policy in the fight against the COVID-19 pandemic has become a priority rather than a political choice for governments. In times of pandemics, sufficient increase in public expenditures is an effective political tool for governments in order to prevent the decline of the economic growth process, loss of welfare, large-scale unemployment and supply problems. Considering the Peacock-Wiseman Hypothesis in the public finance literature, if public expenditures are used as an effective policy tool in the COVID-19 pandemic crisis, a leap in public expenditures is likely. This study evaluates the relationship between the COVID-19 pandemic crisis and public expenditures and reveals the public expenditure policies of selected countries in the fight against COVID-19. It can be said that there is a positive relationship between the level of development of countries and the increase in public expenditures in the COVID-19 pandemic crisis. It is seen that developing economies mostly resort to credit instruments, while developing countries mainly use public expenditure instruments, they also use credits and supports sufficiently. However, due to the continuation of the COVID-19 pandemic crisis, obtaining definitive results will emerge in post-pandemic studies. For this reason, the final results of this study will become clear with the studies carried out after the pandemic crisis.

   5. Chapter 4. Internal Audit in Times of Crisis: The Case of COVID-19

      Turgay Çağlayan, Halis Kıral

      Abstract

      COVID-19, which was declared a global epidemic by the World Health Organization (WHO) as of March 11, 2020, affected all the countries in the world in a short time. This epidemic, which is called the global crisis, poses a serious threat at every scale, from a large-scale structure such as the state to small organisations. In such a crisis, the institutions’ ability to protect their assets and ensure their continuity depends on the timing and effective implementation of the measures to be taken against the crisis. Crisis management, which is the mechanism that ensures the pre-planning of the measures to be taken against the crisis and their implementation when necessary, is also included in the scope of internal control as a measure to be taken by institutions in case of extraordinary situations. Internal audit is a mechanism that adds value to the activities of the institution by measuring the effectiveness of the risk management, internal control and corporate governance processes of the institution. An evaluation of the design and implementation effectiveness of the controls planned within the scope of crisis management will also be needed during the crisis, which can be provided by the internal audit activity. This study aims to determine the role of internal audit activity in the crisis process before, during and after the crisis. Within the scope of the tasks determined in the study and evaluated to be carried out in the stages of the crisis, it will be of vital importance to direct the internal audit in a way that adds value to the activities of the institution. As a result, institutions that can use their internal auditors effectively in different phases of the crisis will be able to make more successful managerial decisions than other institutions, overcome threats to their sustainability more easily and with the least damage, and even turn the crisis into an opportunity.

3. Pandemic in Turkish Economy

   1. Frontmatter

   2. Chapter 5. Financial Measures Taken in Turkey and Selected Countries in Combatting COVID-19 Outbreak

      Tülin Canbay, Hilal Balcı Cura

      Abstract

      In the process passing from past to present, the world history has witnessed many natural and unnatural disasters. Negative events particularly climate change and including outbreaks have caused the world to be affected economically and socially, and caused these said negativities to become global today. The COVID-19 outbreak, which emerged in Wuhan, China's Hubei state, was declared as a “pandemic” in the fourth quarter of 2019, on March 11, 2020, by the World Health Organization (WHO). It is estimated that the economic destruction of the COVID-19 pandemic, as well as its dimension affecting human beings, will be significant by the end of 2020. In addition to the loss of numerous lives around the world, another impact of the virus has been experienced by the global economy. The fact that this flu, which originated in Central Asia, has spread to the USA and Europe has had an impact on the currencies of countries, capital markets, precious metals, barrel oil prices, and even virtual currencies, causing volatile fluctuations in the global markets. In the process that the world is in, COVID-19 has brought the entire world to a significant historical turning point. The entire world has focused on two main issues at this historical turning point. The first of them is to fight the pandemic, to minimize casualties, and to eradicate the pandemic. The second step is to take an action to avoid the crises and damage that will occur in post-epidemic economies. All countries have begun to implement socialization policies in order to protect public health and fight the pandemic when the COVID-19 disease spread around the world. Closures of educational institutions, primarily in trade and tourism, work restrictions, and restrictions on human mobility have had a rapid negative impact on all sectors. Today's economy is a structure where employees, financial institutions, companies, suppliers, consumers, and countries are interconnected. The COVID-19 pandemic has caused the economy to ground to a halt. It is stated that the economy has suffered an unprecedented negative shock as a result of this pandemic. The closure of borders, restrictions on transportation, the lockdown of people in their homes, the imposition of curfews, the reduction of import and export activities, decrease in both supply and demand, as well as the unprecedented developments in the global economy, distinguished this crisis from others. It could not be avoided that all countries around the world, including Turkey, would be affected by this situation. The economic effect of the COVID-19 pandemic harmed the sectors of the economy that directly benefit from natural resources, particularly agriculture (primary sector), the sector where industrial activities take place (secondary sector), and the industries where all services are provided (tertiary sector) (such as education, finance, and tourism sectors). Countries around the world implement economic measures to mitigate the effects of the economic crisis. Financial measures, which are primarily among the economic measures taken by countries in the fight against the COVID-19 pandemic, are discussed in the study in this context.

   3. Chapter 6. Public Transfer Expenditures in Combatting the Economic Impact of COVID-19 Pandemic: Turkey Case and Policy Suggestions

      Yaprak Karadağ Duymazlar

      Abstract

      The supply shocks that emerged with the deterioration of the supply chain and the narrowing of liquidity facilities in the COVID-19 pandemic brought demand shocks by narrowing production and employment. This has taken the epidemic beyond a health crisis. In order to solve the crisis caused by supply and demand shocks, the need to implement expansionary monetary and fiscal policies together has arisen. The most important tool that can be used in fiscal policy is public transfer expenditures. Transfer expenditure is a type of expenditure against which there is no corresponding transfer of goods, services or production factors. Although these expenditures do not directly increase the goods, services or production factors, they can contribute to the accumulation or improvement of outputs/factors in the economy. Social transfer expenditures play a critical role in protecting purchasing power, meeting minimum living standards, expanding the scope of social security; economic transfer expenditures ensure the continuity of production and employment. Unemployment payments, direct income support, social assistance and grants have provided widely in developed countries. Developing countries, on the other hand, have the risk of inadequate demand-side policies due to the financial risks, the narrow fiscal space and the low expenditure multiplier. Turkey, which has determined a demand-oriented economic growth strategy, has faced problems such as high exchange rates, budget deficits, and increase in debt stock for the last few years. The uncertainty and insecurity created by COVID-19 have made this growth strategy of Turkey hard. Shortly after the first COVID-19 case was announced in the country, administrative measures were taken and public life was limited. These measures had negative economic consequences. In the first months of the pandemic, a contraction process was observed in all sectors of the economy. The Economic Stability Shield Package was put into effect for the rapid recovery of the economy. Within the scope of the package, applications such as tax reductions, tax deferrals, deferral of loan and interest payments, loan support packages, increasing pensions, minimum wage support and short-time working allowance can be listed. In the process, sectors such as construction, manufacturing and industry entered into a rapid recovery process. However, the expected improvement in sectors such as tourism, transportation, accommodation, food, culture, arts, entertainment and sports could not be realized due to the severity of the pandemic. While the new waves of the pandemic continued, public transfer expenditures continued to be presented. Tax, loan and interest payments have been postponed and the duration of the short-time working allowance has been extended. The supports provided in Turkey, it is seen that monetary policy is heavily utilized. Credit support packages such as individual basic needs, tradesmen, housing, vehicle and vacation were provided and the demand side was tried to be kept alive. In the field of social transfers—direct income supports, cash aids and grants—lagged significantly behind credit supports. Considering the projections for Turkey, additional social transfer expenditures should be made ready to be presented in order to protect the purchasing power of households. The sustainability of economic transfer expenditures is critical in maintaining the level of economic growth, employment and output in the long run.

   4. Chapter 7. Effect of COVID-19 Pandemic on Tax Perception: An Empirical Study

      Burhanettin Onur Kireçtepe, Bernur Açıkgöz

      Abstract

      Tax is a financial burden that individuals have to bear as a result of an administrative act carried out by the tax administration. Although 24.1% of taxpayers consider tax as a sacred duty Çoban et al. (Sezgin Vergi Mükelleflerinin Davranışları Üzerine Ampirik Bir İnceleme: Denizli Örneği 777–792, 2004), the European Human Rights Committee (ECHR) states that “…Any law involving some form of tax liability involves deprivation from the relevant assets…”. The European Court of Human Rights (ECHR) declared that it accepts the case law of the ECHR by saying “taxation as an intervention to the guaranteed rights” in Article 1 of Protocol 1 Yaltı (Vergi Yükümlüsünün Hakları, 2006). Regardless of how we define the tax, for an ideal tax system, tax compliance of the taxpayer should be ensured at the highest possible level. One of the most important factors affecting tax compliance is tax perception. In this study, we will try to answer these questions and analyse how various demographic differences affect tax perception during the COVID-19 pandemic. In the study, the data of the online survey prepared just for this study will be used and the differences will be determined by this way. It will be important to reveal the changes made by various demographic variables in the perception of tax during the COVID-19 process, in order to shed light on the future steps that the tax administration and the legislator can take regarding taxes.

   5. Chapter 8. COVID-19 Outbreak and Budget Management: An Assessment for Turkey Within the Framework of Selected Country Examples

      Elif Ayşe Şahin İpek, İbrahim Attila Acar

      Abstract

      The COVID-19 pandemic has affected the economy through supply, demand and confidence channels, causing recession. One of the financial tools used in the fight against the economic recession caused by the COVID-19 is the budget. In this study, the content of the budgetary measures, their transparency, legal infrastructure and their impact on the budget performance were evaluated. In this evaluation, the examples of France, Germany, England, Denmark, USA and Turkey were examined. The degree of quarantine measures (full quarantine, partial quarantine, mass immunity, etc.) was effective in the selection of countries. However, the limitation of the study is that the study covers the year 2020 and therefore cannot make cross-country comparisons in terms of the effect of the budgetary measures taken on the budget performance. As a result of the study, it is stated that the pandemic will continue to be effective on the parameters of the budget deficit, debt and interest burden for Turkey. It has been concluded that the differentiation between countries will emerge in terms of the transparency and legal infrastructure of the budgetary measures taken.

4. Pandemic and New Financial Trends

   1. Frontmatter

   2. Chapter 9. Effects of COVID-19 Pandemic on Robot Employment and Digitalization in Employment

      Abdulcelil Gazioğlu, Zeynep Demirci Çakıroğlu, Alper Doğan

      Abstract

      The COVID-19 pandemic has significantly affected all countries of the world in many areas since the first day it was seen. The virus, which was first seen in China, spread to other countries over time and was declared a pandemic on March 11, 2020. In order to tackle the virus, people were prevented from being in groups; events, sports competitions and conferences were cancelled; and distance education was started by using technology. The aim was to prevent people from coming together and to reduce the spread of the virus. As a result of the measures taken within the scope of struggling the COVID-19 pandemic, practices such as social distancing, lockdown and quarantine caused significant changes in social life, and also their reflections on the economy were negative. The slowdown in production, the increase in unemployment and the recession can be given as examples of these negative results. In this context, sectors that want to continue their economic activities have resorted to policies such as creating an unmanned work environment by making use of digital technologies or enabling people to work from home with the remote working method instead of working in the office. This situation has led to an increase in digitalization and automation in employment, which had a positive momentum before the pandemic. In the last twenty years, technology has reached a very advanced level in economy and employment, as in all areas of life. Digitalization in employment and employment of robots increase significantly every year, thanks to technological advances such as artificial intelligence, cloud technology and the Internet of Things. On the basis of these technologies, whose importance has increased considerably today, there is the knowledge and technology accumulation created by the industrial revolutions. All industrial revolutions, from the first industrial revolution to the present, have produced economic and social consequences. Especially, the mechanization in agriculture has caused many people to be unemployed. Today, the advancement of automation and robotic technologies has increased the use of these technologies in employment. As a natural consequence of this, as many international research institutions have reported, it is predicted that in the near future, occupations made by people today will be completely automated and unemployment will increase. Since applications such as social distance, full closure and quarantine, which entered our lives due to the COVID-19 pandemic, have brought production to a halt, many sectors have sought ways to carry out their activities with as few people as possible by shifting their investments to digital technologies. In this context, while unmanned aerial and ground vehicles are used more widely for contactless delivery, it is planned to meet the needs of people without creating crowded environments with measures such as remote working and online trade.

      In accordance with these policies carried out to prevent the COVID-19 pandemic, remote working has been adopted in many sectors and has brought the necessity of robots to the agenda. In this context, the question of “should robots be taxed”, which started to be discussed before the COVID-19 pandemic, becomes more important. In addition, whether or not to pay social security premiums for robots has been one of the issues that started to be discussed. At the same time, due to the possibility of unemployment of a large part of the population with the increase in robot employment, the issue of providing a certain amount of monthly income to people to meet their basic needs with the universal basic income application is emphasized. A financing is needed for this income transfer to the unemployed population. In this context, it is claimed that robots should be taxed. One of the reasons for the taxation of robots is that robots do the same work with people who work in the factory and are subject to tax on their income. Another reason is stated as ensuring the equality of competition between the company that employs the robot and the company that does not. However, besides these views, there are also those who argue that robots should not be taxed. As automation increases, production volume will increase, so it will positively affect economic growth. In addition, since more production means purchasing more raw materials, finished products and semi-finished products, people who employ robots will indirectly pay more taxes. It can be seen that taxation of robots is a new discussion topic. If digitalization and automation continue at the speed it has reached with the effect of COVID-19, it will be discussed more and its theoretical foundations will be completed in the near future.

   3. Chapter 10. Liquidity Steps: Policy Actions Taken by Central Banks During Coronavirus Pandemic

      Ümit Çevik, Belgin Yakışan Mutlu

      Abstract

      This article, it is aimed to examine the primary actions taken by central banks to support the sectors, businesses, and individuals in difficulty during the epidemic process. In line with this purpose, we compiled actions of the US Federal Reserve (FED), the European Central Bank (ECB), the Bank of Japan (BoJ), Bank of China (PBoC), and the Bank of England (BoE) as leading central banks, as well as many countries including Turkey. While the main framework of the moves made in this process is to keep the liquidity abundant by creating a low-interest environment, it can be summarized as providing the banks with the necessary flexibility to open credit channels and support the tradesmen and individuals. Quantitative easing was one of the main policies applied during the epidemic. In addition to this, facilitating the access of countries to dollars and euros through swap agreements was among the policies implemented. Looking at all these steps taken by the central banks from January to mid-June, it was seen that the moves stimulated the flow of credit towards the real economy and the employment market, while on the financial side, it had an effect on reducing the volatility in the markets. While it is agreed that the problem in the liquidity flow has been eliminated and the pressure on the supply of dollars has been alleviated through the swap channel, it is considered that the extent to which the measures and incentives will weaken the financial side will depend on how to further the outbreak will last.

   4. Chapter 11. The Effect of COVID-19 on Electronic Currencies as They Become Common Payment Methods

      Doğancan Akata

      Abstract

      Social events or disasters have caused changes in the materials that individuals use in daily life. On the other hand, technological developments have also affected these changes. Nowadays, this situation is often referred to as digital transformation. Digital transformation is a fundamental process that uses digital tools, through technological and cultural changes. This process has affected the world of finance as well as in all areas of life. The most important effects are the transfer of payment systems and markets to the Internet. The use of electronic money by individuals in daily life is increasing. Electronic money refers to a certain amount of cash or deposits exchanged from the financial institution through the fast payment service initiated by banks and third parties using certain electronic channels (credit cards, etc.). This study evaluates the effect of the COVID-19 pandemic, on the use of electronic money. The course of digital transformation in financial instruments has changed after COVID-19. It is particularly important to assess, in a realistic way, the risks of contamination through cash, as avoiding cash can have distributional consequences. After the outbreak of the pandemic, the increase in online shopping rates and the electronic payment preferences of individuals also increased. However, some companies that place an online order apply to the cash on delivery method because they cannot accept online payments or because most of their customers cannot pay electronically. States are also developing projects to adapt to this new payment system. Problem is that infrastructure investments that require high amounts of public expenditure are investments that the state and international organizations (for developing countries) can afford and require time.

   5. Chapter 12. Health and Refugee Protection as a Global Public Good: Evaluation of COVID-19 in Terms of Refugees

      Zeynep Demirci Çakıroğlu

      Abstract

      Global public goods: it is defined as goods and services whose benefits or harms exceed national borders and affect countries located in more than one geographical region and even the whole world, that not competition and exclusion in their consumption, and extending to future generations as well as the present generation. One of these goods is health. Pandemic, which is a global problem, emerges when the infectious diseases emerging in the countries go beyond the borders of the country and spread to other countries. The countries of the world have faced many epidemic diseases from past to present. Diseases such as Ebola, plague, polio, H1N1 and Zika are some of these epidemics. The last epidemic we have witnessed is COVID-19. The COVID-19 pandemic has seriously affected all countries of the world with the effect of globalization. Along with the health sector, there are difficulties in many different sectors, because countries have implemented various policies to control the pandemic, and the main purpose has been to reduce the risk of contamination by restricting people's movement. Although the measures taken are successful in controlling the pandemic, there are negative economic consequences. In this context, it is observed that the macroeconomic indicators of many countries have changed negatively. Another dimension of the COVID-19 process, which causes serious problems all over the world, is the refugees’ conditions. In a globalizing world, the refugee problem is a global public bad, and providing protection to refugees in order to solve this problem is also a global public good. In this sense, it is necessary to pay attention to the living conditions of refugees in the measures taken regarding COVID-19. Around 20 million people around the world have left their homes due to war, violence or oppression in their country and continue their lives as refugees. Refugees face a series of difficulties following their asylum in various countries. Language barriers, difficulty in accessing information, sociocultural differences, close contact with people and inadequate access to health services are some of these difficulties. With these difficulties, refugees already live in overcrowded environments without access to basic health care. Conditions such as lack of clean water and soap, insufficient health personnel, overcrowding and malnutrition are the problems experienced in refugee camps. At the same time, it is not possible to comply with social distance in the camps. In this context, refugees who encounter various difficulties even under normal conditions are more likely to become more vulnerable due to COVID-19, and the risk of contracting COVID-19 disease in refugee camps increases. Apart from refugees, the COVID-19 pandemic also negatively affects asylum seekers, forced migrants, illegal immigrants and the homeless, because these people live in environments with a high risk of contracting an epidemic disease. Their access to cleaning and basic living supplies is limited, or in some cases non-existent. Due to overcrowded prisons, poor health conditions, inadequate health care and lack of social distancing, the virus can spread easily among these people. Within this scope, although aid is provided by various organizations to protect refugees, asylum seekers and forced migrants from the pandemic, it can be said that these aids are not very sufficient. Since it is not possible to prevent diseases without considering the health of everyone in the society, measures should be taken to cover the whole society in the actions to be carried out to prevent COVID-19. Among these measures, refugees and immigrants should not be ignored. In the ongoing pandemic, no one is immune, including these vulnerable groups. Therefore, special measures should be taken to slow down and prevent the spread of the epidemic, including refugees and migrants. Since there can be no public health without refugee and migrant health, they must be included in national public health systems. It should be ensured that the information requested to reach the public about the epidemic reaches these groups by removing the language barriers. If measures are not taken to improve camp conditions, it is likely that COVID-19 will emerge in the camps and spread very quickly. For this reason, if the pandemic is to be prevented, an approach that will include refugees and migrants is needed.

   6. Chapter 13. Analysis of Selected Twitter Headers During the Pandemic Using Big Data Method

      İbrahim Attila Acar, Volkan Altıntaş

      Abstract

      The behaviours and shares of social media users have recently been closely followed by governments, institutions and companies. Governments/companies determine some of their strategies by processing the “big data” created by the shares made by users. Big data analysis has been used extensively lately. During the pandemic period, people shared their ideas and experiences on social media platforms. Twitter is one of the most popular worldwide Online Social Network (OSN). One of these sharing platforms is Twitter Social Media Platform. In this study, between 1 and 31 May 2020, user posts containing keywords related to COVID-19 were collected. The analysis of the shares was made using natural language processing and text mining techniques on the corpus. In this paper, we use topic identification and sentiment analysis to explore a large number of tweets in Turkey. We investigate 19.199.490 tweets in Turkish, and we analyse comparing the effectiveness of topic identification and sentiment analysis in the messages in pandemic days.

5. Backmatter