Germany’s Macroeconomic Drivers Through the COVID-19 Pandemic and Recovery Period

Stefan Hohberger

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper estimates a three-region structural macroeconomic model to analyse the main drivers of GDP, inflation, and wage growth through the COVID-19 pandemic and recovery period in Germany. By incorporating COVID-related shocks, trade in commodities, and endogenous ELB periods, the estimation results suggest: (i) the COVID-19 pandemic in 2020-21 was mainly driven by domestic and foreign lockdown shocks (demand-driven), (ii) the inflation surge in 2021-22 was characterised by an increase in commodity prices, a recovery of global demand, and pronounced supply-side factors, and (iii) wage growth per hour was counterbalanced by competing demand and supply-side effects. Key estimated shocks in the model closely match off-model indicators, supporting its empirical plausibility.

Keywords: COVID-19; business cycle; inflation; open-economy DSGE model; Bayesian estimation; Germany (search for similar items in EconPapers)
JEL-codes: C51 E32 E52 F41 F45 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2024-07
New Economics Papers: this item is included in nep-dge and nep-eec
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2024-48

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