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The Role of Fiscal Policy Measures in Mitigating the Effects of the Covid-19 Crisis in Germany

Author

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  • Michael Christl
  • Silvia De Poli
  • Tine Hufkens
  • Andreas Peichl
  • Mattia Ricci

Abstract

We use a novel methodology for modeling the socio-economic impacts of economic crisis in Germany, and apply it to estimate the impact of the Covid-19 pandemic We estimate that German households lost more than 3 percent of their market income in 2020 due to the Covid-19 pandemic, with the effect being strongly regressive However, the fall in market income was largely offset by the tax-benefit system, which softened the reduction in disposable income to a more modest 0.5 percent Our study highlights the importance of shorttime work and discretionary policy measures (the Covid-19 one-off child benefit and the increase in the tax allowance for single parents) in cushioning the impact of the Covid-19 crisis The strong income-stabilizing property of shorttime work and discretionary policy measures for low-income earners has also helped overcome a strong reduction in household demand

Suggested Citation

  • Michael Christl & Silvia De Poli & Tine Hufkens & Andreas Peichl & Mattia Ricci, 2023. "The Role of Fiscal Policy Measures in Mitigating the Effects of the Covid-19 Crisis in Germany," EconPol Forum, CESifo, vol. 24(05), pages 36-40, September.
    • Handle: RePEc:ces:epofor:v:24:y:2023:i:05:p:36-40
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