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Explaining the cross-country differences in the economic fallout during the COVID-19 pandemic crisis

Author

Listed:
  • Dimitra Dimitropoulou

    (Bank of Greece)

  • Anastasia Theofilakou

    (Bank of Greece)

Abstract

This study investigates the main drivers of the differences in the economic fallout in advanced economies during the COVID-19 crisis. In addition to containment measures, the analysis places emphasis on pre-crisis factors that may have bolstered economic resilience during the health crisis and mitigated the output loss. Also, it assesses the role of discretionary fiscal policy in 2020 in explaining the cross-country variation in the economic fallout by explicitly controlling for the simultaneity of the policy measures and the size of the GDP shock. The authors find that factors such as social distancing measures and the structure of the economy, which are directly related to the COVID-19 crisis, explain a large part of the asymmetry in output loss in 2020 across countries. Pre-crisis structural and institutional factors also seem to contribute to economic resilience during the current crisis, while stronger discretionary fiscal support in 2020 is associated with lower output loss.

Suggested Citation

  • Dimitra Dimitropoulou & Anastasia Theofilakou, 2021. "Explaining the cross-country differences in the economic fallout during the COVID-19 pandemic crisis," Economic Bulletin, Bank of Greece, issue 53, pages 29-48, July.
    • Handle: RePEc:bog:econbl:y:2021:i:53:p:29-48
    DOI: 10.52903/econbull20215302
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    Cited by:

    1. Sofia Anyfantaki & Yannis Caloghirou & Konstantinos Dellis & Aikaterini Karadimitropoulou & Filippos Petroulakis, 2022. "Skills, management practices and technology adoption in Greek manufacturing firms," Economic Bulletin, Bank of Greece, issue 55, pages 7-42, July.
    2. Nikos Ventouris & Georgios Palaiodimos, 2022. "Proposals for the reform of EU fiscal rules," Economic Bulletin, Bank of Greece, issue 55, pages 67-81, July.
    3. Sofia Anyfantaki & Petros Migiakis & Katerina Paisiou, 2022. "Green finance in Europe: actors and challenges," Economic Bulletin, Bank of Greece, issue 55, pages 83-105, July.
    4. Christos Catiforis, 2022. "Post-pandemic inflation: Phillips Curve, trends, drivers and lessons," Economic Bulletin, Bank of Greece, issue 55, pages 43-65, July.

    More about this item

    Keywords

    economic resilience; COVID-19 pandemic; cross-sectional analysis;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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