Countries with more democratic political regimes experienced greater GDP loss and more deaths from COVID-19 in 2020. Using ﬁve diﬀferent 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.
Keywords: Democracy, Economic Growth, Public Health, Pandemic, Instrumental Variables