Output Losses in Europe During COVID-19: What Role for Policies?

Anil Ari, Jean-Marc Atsebi and Mar Domenech Palacios

No 2022/130, IMF Working Papers from International Monetary Fund

Abstract: We use a decomposition methodology to analyze the factors underlying the differentiated output losses of European countries in 2020. Our findings are fourfold: First, 2020 growth outcomes can be explained by differences in mobility, underlying growth trends, and pre-pandemic country fundamentals. Second, fiscal and monetary policies helped alleviate output losses during the pandemic in all European countries but to a varying extent. Third, shallower recessions in emerging market economies in Europe can be attributed to higher underlying growth and younger populations. Fourth, fiscal multipliers were higher in countries where above-the-line measures accounted for a larger share of the total fiscal package, the size of the total fiscal package was smaller, and inequality and informality were greater, as well as in countries with IMF-supported program during the pandemic.

Keywords: COVID-19 crisis; output losses; monetary policy; fiscal policy; fiscal multipliers; growth outcome; output loss; decomposition methodology; types of fiscal policies; monetary policy support; COVID-19; Central bank policy rate; Income inequality; Europe; Global (search for similar items in EconPapers)
Pages: 40
Date: 2022-07-01
New Economics Papers: this item is included in nep-ban, nep-cba and nep-eec
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