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The COVID19-Pandemic in the EU: Macroeconomic Transmission and Economic Policy Response

Philipp Pfeiffer, Werner Roeger and Jan in 't Veld

No 127, European Economy - Discussion Papers 2015 - from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: This paper uses a macroeconomic model to analyse the transmission of the COVID19-pandemic and its associated lockdown and quantify the stabilising effects of the economic policy response. Our simulations identify firm liquidity problems as crucial for shock propagation and amplification. We then quantify the effects of short-term work allowances and liquidity guarantees - central policy strategies in the European Union. The measures reduce the output loss of COVID19 and its associated lockdown by about one fourth. However, they cannot prevent a sharp but temporary decline in production.

JEL-codes: E32 E6 F45 J08 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2020-07
New Economics Papers: this item is included in nep-cmp, nep-lab, nep-mac, nep-opm and nep-ore
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