Pandemics and Economic Growth: Evidence from the 1968 H3N2 Influenza

We evaluate the 1968 H3N2 Flu pandemic’s economic cost in a cross-section of 52 countries. Using excess mortality rates as a proxy for the country-specific severity of the pandemic, we find that the average mortality rate (0.0062% per pandemic wave) was associated with declines in consumption (-1.9%), investment (-1.2%), output (-2.4%), and productivity (-1.9%). Our main findings highlight the role of both negative demand-side and supply-side shocks in the flu pandemic’s aftermath.