 Gauging the effects of the German COVID-19 fiscal stimulus packageNatascha Hinterlang, Stéphane Moyen, Oke Röhe and Nikolai Stähler European Economic Review, 2023, vol. 154, issue C Abstract: We simulate the fiscal stimulus package set up by the German government to alleviate the costs of the COVID-19 pandemic in a dynamic New Keynesian multi-sector general equilibrium model. We find that, cumulated over 2020–2022, output losses relative to steady state can be reduced by more than 6 PP. On average, welfare costs of the pandemic can be mitigated by 11%, or even by 33% for liquidity-constrained households. The long-run present value multiplier of the package amounts to 0.5. Consumption tax cuts and transfers to households primarily stabilize private consumption, and subsidies prevent firm defaults. The most cost-effective measure is an increase in productivity-enhancing public investment. However, it only fully materializes in the medium to long-term. Relative to the respective pandemic impact, some sectors such as the energy and the manufacturing sector benefit above average from the fiscal package, while the effect for some services sectors turns out to be below average. Keywords: Fiscal policy; COVID-19; DSGE; Sectoral heterogeneity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:154:y:2023:i:c:s0014292123000363 DOI: 10.1016/j.euroecorev.2023.104407 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
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