COVID-19 and the growth potential

Michael Grömling

No 53/2020, IW-Reports from Institut der deutschen Wirtschaft (IW) / German Economic Institute

Abstract: The lasting economic impact of the COVID-19 pandemic will become apparent in the development of the macroeconomic factors of production - labour, capital, human capital as well as the stock of technical knowledge. Changes in behaviour such as a greater acceptance of technology can strengthen potential output permanently. By contrast, negative effects may arise from growing protectionist attitudes or long-lasting uncertainties and 'scarring effects'. In any case, the crisis has induced a technology push. This may be intensified if digitisation gains additional support from investments in infrastructure or if the pandemic heralds a renaissance in the natural sciences - with a corresponding impact on human capital and physical capital as well as on technical knowledge. For the time being, it is unclear what the effects of restructuring and secular structural change will be on potential output. However, dangers are lurking in the acceleration of geopolitical tensions, a misunderstanding of technological sovereignty and increasing government interventions, which as a whole could hamper innovation and investment.

JEL-codes: E23 E24 F20 I15 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/225494/1/1737349841.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwkrep:532020

Access Statistics for this paper

More papers in IW-Reports from Institut der deutschen Wirtschaft (IW) / German Economic Institute Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().