Effects of Covid-19 on Euro Area GDP and Inflation: Demand vs. Supply Disturbances

Robert Kollmann ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the macroeconomic effects of the Covid-19 epidemic on Euro Area (EA) GDP and inflation, using a stylized New Keynesian model. Covid is interpreted as a combination of aggregate demand and aggregate supply disturbances. Offsetting aggregate demand and supply changes are shown to account for the stability of EA inflation, in the face of Covid. The evidence presented here indicates that Covid-induced aggregate demand and supply shifts were persistent. An aggregate supply contraction is identified as the dominant force driving the sharp fall of EA GDP in 2020.

Keywords: Covid; real activity; inflation; aggregate demand; aggregate supply. (search for similar items in EconPapers)
JEL-codes: E31 E32 E43 E52 E65 (search for similar items in EconPapers)
Date: 2021-06-14
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://mpra.ub.uni-muenchen.de/108285/1/MPRA_paper_108285.pdf original version (application/pdf)

Related works:
Journal Article: Effects of Covid-19 on Euro area GDP and inflation: demand vs. supply disturbances (2021)
Working Paper: Effects of Covid-19 on Euro Area GDP and Inflation: Demand vs. Supply Disturbances (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:108285

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