The COVID-19 (coronavirus) pandemic and associated containment measures are expected to cause far-reaching damage to economies around the world. Firms are suffering from reduced demand due to movement restrictions, from reduced labor supply and from constraints to sourcing material inputs. The breakup of otherwise healthy businesses in response to a temporary shock implies large social costs. Governments are therefore intent on designing emergency policies to keep businesses afloat. Yet, limited availability of firm censuses and survey data in many lower-income countries hampers policy makers’ ability to simulate economic scenarios and the effect of policy measures.
This blog discusses how policy makers can use firm-level administrative tax records to simulate the effects of the COVID-19 shock on formal sector firms.
This blog was originally published by the World Bank. You can access it here.