Countermeasures against economic crisis from COVID-19 pandemic in China: An analysis of effectiveness and trade-offs

Yawen Liu, Qi Cui, Yu Liu, Jinzhu Zhang, Meifang Zhou, Tariq Ali, Lingyu Yang, Kuishuang Feng, Klaus Hubacek and Xinbei Li

Structural Change and Economic Dynamics, 2021, vol. 59, issue C, 482-495

Abstract: The effectiveness of different countermeasures to economic crisis from the public health emergency is still inadequately understood. We establish an illustrative scenario, specifying the shocks of COVID-19 pandemic and countermeasures applying a general equilibrium model to analyze the effectiveness of countermeasures with a particular focus on trade-offs in the impacts of monetary and fiscal policies. We find that both monetary and fiscal countermeasures could effectively mitigate the economic damages to GDP and employment. However, they would also produce adverse side-effects such as an increase in consumer price by 1.05% and 0.57%, respectively, and a decline in exports by 2.61% and 1.05%, respectively. Monetary policies would exacerbate the damages to external demand by supply-side shocks of the pandemic, but they are more suitable for mitigating demand-side shocks. While fiscal policies would benefit nearly all producing sectors, monetary policies would mainly affect export-oriented manufacturing sectors negatively.

Keywords: COVID-19 pandemic; Countermeasures; Effectiveness; Trade-offs; CGE model (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:59:y:2021:i:c:p:482-495

DOI: 10.1016/j.strueco.2021.09.017

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