|Author Name||NARITA Yusuke (Visiting Fellow, RIETI) / SUDO Ayumi (Yale University)|
|Creation Date/NO.||April 2021 21-E-034|
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Countries with more democratic political regimes experienced greater GDP loss and more deaths from Covid-19 in 2020. Using five different instrumental variable strategies, we find that democracy is a major cause of the wealth and health losses. This impact is global and is not driven by China and the US alone. A key channel for democracy's negative impact is weaker and narrower containment policies at the beginning of the outbreak, not the speed of introducing policies.