Understanding structural effects of COVID-19 on the global economy: First steps

Christine Arriola, Przemyslaw Kowalski and Frank van Tongeren

No 261, OECD Trade Policy Papers from OECD Publishing

Abstract: The COVID-19 pandemic and associated policy responses are likely to alter the global economy in a way that affects its ability to adjust to future shocks and changes. This paper develops a point of reference for thinking about developments which could be deemed long-term and which could in turn be incorporated into what we call a “post-COVID-19 baseline”. Using the OECD’s CGE model METRO, the paper finds that output declines observed in 2020 were driven primarily by reductions in labour productivity due to varying abilities to telework across countries. Negative economic impacts were largely mitigated by government support to firms and households. Border measures to control the spread of the virus also had less of an impact on total output, reflecting important government efforts to facilitate cross border flows of goods and services whilst managing cross border movements of people. Demand shifts had the smallest impact on global GDP, but had significant and heterogeneous impacts on consumption, output and trade changes across countries and sectors. This in turn contributed to pressures on some global supply chains.

Keywords: general equilibrium model; shocks; trade (search for similar items in EconPapers)
JEL-codes: C68 F14 F17 (search for similar items in EconPapers)
Date: 2022-05-06
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:oec:traaab:261-en

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