You can do what you want by nesting the cursor in a BEGIN ... END
block. See Roland Bouman's "Nesting MySQL Cursor Loops" article for more details. It may be worth noting his comments about this technique often being unnecessary, as it is often possible to rewrite the query instead of having to perform a nested cursor.
Should you still need to nest your cursor in a loop, your code should look something like this:
increment: LOOP
block_cursor: BEGIN
DECLARE cur1 CURSOR FOR SELECT person_id, publication_id FROM p_publication WHERE person_id = new_count;
DECLARE CONTINUE HANDLER FOR NOT FOUND SET done = 1;
OPEN cur1;
REPEAT
FETCH cur1 INTO pub_id, per_id;
IF NOT done THEN
INSERT INTO test.t2 VALUES (pub_id, per_id);
END IF;
SET new_count = new_count + 1;
UNTIL done END REPEAT;
CLOSE cur1;
IF !(new_count < old_count ) THEN
LEAVE increment;
END IF;
END block_cursor;
END LOOP increment;
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