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The Impact of the Lockdown on the Greek Economy and the Role of the Recovery Fund

Author

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  • Economides George
  • Philippopoulos Apostolis
  • Vassilatos Vanghelis

    (Athens University of Economics and Business, Athens, Greece)

Abstract

We develop a microfounded macroeconomic model that embeds the key features of the Greek economy. After calibrating the model to Greek data over 1995–2019, we assume that the economy is initially in the year 2019 and then quantify the adverse economic impact of the lockdown measures taken to control the spread of the pandemic, as well as the implications of the various policy measures (at national and EU level) taken to cushion the impact of the economic hit. We give quantitative answers to questions like: What will be the size and duration of the economic downturn? What are the implications of the national fiscal stimulus? What will be the role of the fiscal transfers coming from the European Recovery Fund? Our results imply that the national fiscal stimulus package adopted so far is helpful but, for the Greek economy to enter an era of sustainable growth, a mix of policies is also needed that combines: (i) a growth-enhancing fiscal mix (ii) product market deregulation (iii) a socially productive use of the resources coming from the Recovery Fund.

Suggested Citation

  • Economides George & Philippopoulos Apostolis & Vassilatos Vanghelis, 2022. "The Impact of the Lockdown on the Greek Economy and the Role of the Recovery Fund," The B.E. Journal of Macroeconomics, De Gruyter, vol. 22(1), pages 307-361, January.
    • Handle: RePEc:bpj:bejmac:v:22:y:2022:i:1:p:307-361:n:13
    DOI: 10.1515/bejm-2020-0267
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    Citations

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    Cited by:

    1. Gordon Betcherman & Nicholas Giannakopoulos & Ioannis Laliotis & Ioanna Pantelaiou & Mauro Testaverde & Giannis Tzimas, 2023. "The short-term impact of the 2020 pandemic lockdown on employment in Greece," Empirical Economics, Springer, vol. 65(3), pages 1273-1307, September.
    2. George Economides & Giota Koliousi & Natasha Miaouli & Apostolis Philippopoulos, 2024. "From debt arithmetic to fiscal sustainability and fiscal rules: taking stock and policy lessons," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 194, Hellenic Observatory, LSE.

    More about this item

    Keywords

    COVID-19; growth; macroeconomic policy;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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