Date of Award
Master of Science
Taking GDP growth and inflation as endogenous variables, this paper employs a Structural VAR from Baumeister and Hamilton (2015, 2019) to identify aggregate demand and aggregate supply shocks for Bhutan, focusing on the COVID-19 pandemic. The results suggest that 94 percent of the GDP growth plunge in 2020 is attributable to a fall in aggregate supply. The higher inflation during the COVID-19 pandemic in 2020 also implies a negative supply shock. Although the magnitudes differ, characterizing the COVID-19 pandemic in Bhutan as a supply shock coincides with preceding episodes that were also primarily driven by supply shocks.
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