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The impact of COVID-19 on potential output in the euro area

Katalin Bodnár, Julien Le Roux, Paloma Lopez-Garcia and Béla Szörfi

Economic Bulletin Articles, 2020, vol. 7

Abstract: The coronavirus (COVID-19) pandemic almost certainly affected potential output negatively via various channels, affecting the trends of total factor productivity, capital and labour. Quantitative estimates show that euro area potential growth will likely stall or even decline in 2020 and the pace of the recovery is highly uncertain, as it depends on whether the shock is temporary or persistent. Comprehensive policy measures are playing a crucial role in preventing hysteresis in the euro area economy and long-term economic scarring. JEL Classification: E22, E23, E24, E32, O11, O40

Keywords: COVID-19; output gap; Potential output; production function (search for similar items in EconPapers)
Date: 2020-11
Note: 2881411
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