Using Macroeconomic Frameworks to Analyze the Impact of COVID-19: An Application to Colombia and Cambodia

By Ales Bulir, Daniel Baksa, Juan S Corrales, Andres Gonzalez, Diego Rodriguez, Dyna Heng

April 1, 2021

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Ales Bulir, Daniel Baksa, Juan S Corrales, Andres Gonzalez, Diego Rodriguez, and Dyna Heng. Using Macroeconomic Frameworks to Analyze the Impact of COVID-19: An Application to Colombia and Cambodia, (USA: International Monetary Fund, 2021) accessed November 21, 2024

Disclaimer: This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This technical note and manual (TNM) addresses the following issues: • Evaluating the full implications from the policies adopted to mitigate the impact of the COVID-19 pandemic on the economy requires a well-developed macroeconomic framework. This note illustrates how such frameworks were used to analyze Colombia and Cambodia's shock impact at the beginning of the pandemic. • The use of macroeconomic frameworks is not to infer general policy conclusions from abstract models or empirical analysis but to help policymakers think through and articulate coherent forecasts, scenarios, and policy responses. • The two country cases illustrate how to construct a baseline scenario consistent with a COVID-19 shock within structural macroeconomic models. The scenario is built gradually to incorporate the available information, the pandemic's full effects, and the policy responses. • The results demonstrate the value of combining close attention to the data, near-term forecasting, and model-based analyses to support coherent policies.

Subject: COVID-19, Expenditure, Fiscal policy, Income, Public debt

Keywords: Fiscal policy variable, Headline inflation, Labor supply shock, Modeling literature strand, Monetary policy rate, Potential GDP, TNM

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Technical Notes and Manuals No. 2021/001
Stock No:

TNMEA2021001
ISBN:

9781513571973
ISSN:

2075-8669

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