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

By Anil Ari, Jean-Marc B. Atsebi, Mar Domenech Palacios

July 1, 2022

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Anil Ari, Jean-Marc B. Atsebi, and Mar Domenech Palacios. Output Losses in Europe During COVID-19: What Role for Policies?, (USA: International Monetary Fund, 2022) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Central bank policy rate, COVID-19, Financial services, Fiscal multipliers, Fiscal policy, Health, Income inequality, National accounts

Keywords: Central bank policy rate, COVID-19, COVID-19 crisis, Decomposition methodology, Europe, Fiscal multipliers, Fiscal policy, Global, Growth outcome, Income inequality, Monetary policy, Monetary policy support, Output loss, Output losses, Types of fiscal policies

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/130
Stock No:

WPIEA2022130
ISBN:

9798400215247
ISSN:

1018-5941

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