1. You have obtained information from researchers from the University of Canberra who have calculated the changes in the Gini Index for Australia during the first months of the pandemic, between March 2020 and June 2020.

The researchers' modelling estimates that the Gini Index would have gone up in Australia had it not been for the government's fiscal policy response.

Your colleagues have interpreted this finding in the following explanation (see following paragraph). Check the content of their explanation for accuracy. As part your correction, you need to draw upon the economic evidence we have examined in class throughout this course to explain what happened to inequality, as measured by the Gini Index, in the years following past pandemics and epidemics? Provide your corrected version.

There were concerns that the COVID-19 pandemic would worsen inequality. A worsening of inequality would be indicated by the Gini Index falling. Previous studies investigating the effect of past pandemics show that measures of economic inequality increased following the pandemic, with the effects lasting for up to 4 to 5 years.

The finding that the Gini Index in Australia did not go up during the first few months of the COVID19 pandemic implies that government policy was not very effective in addressing inequality concerns.

The Gini Index is related to the Lorenz Curve. If inequality were to worsen, this would be visually depicted by the Lorenz Curve moving closer towards the 45 degree line of perfect inequality.

If measures of inequality were found to worsen, this provides a case for the government to scale back its redistribution policies such as transfer payments, so that automatic stabilisers can take effect.