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Which crisis support fiscal measures worked during the COVID-19 shock in Europe?

Evi Pappa, Andrey Ramos and Eugenia Vella

No 2217, DEOS Working Papers from Athens University of Economics and Business

Abstract: We build a new database by classifying the COVID-19 fiscal measures for twelve EU countries into seven spending categories and examine how the different support packages affected the economy. On average, fiscal measures supported the output recovery without generating significant inflationary pressures. This finding masks substantial heterogeneity: Assistance to small and medium enterprises and specific sectors contributed significantly to stimulating the economy and to maintaining inflation. Direct pandemic spending and unemployment benefits and measures to sustain employment levels generated sizeable output multipliers and had no inflationary costs. Conversely, universal help only had positive effects on inflation and transfers to households did not do much apart from affecting confidence.

Keywords: COVID-19 crisis; fiscal measures; multipliers; sentiment; transfers; assistance to SMEs; inflation (search for similar items in EconPapers)
JEL-codes: C23 E62 (search for similar items in EconPapers)
Date: 2022-07-01
New Economics Papers: this item is included in nep-dem, nep-eec and nep-mac
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