IDEAS home Printed from
   My bibliography  Save this book chapter

The fiscal policy reaction to COVID-19, or the fast way out of the crisis

In: CNB Global Economic Outlook - May 2020


  • Petr Polak
  • Lubos Komarek
  • Iveta Polaskova
  • Pavla Netusilova


The COVID-19 pandemic has affected the entire world economy. Few countries have escaped being paralysed directly by the illness, but the openness of economies and the close trade links between them and have resulted in serious downturns even in countries with a lower incidence of the disease. Many businesses were forced to shut down overnight, so many parts of the economy have locked up completely. Central banks have eased monetary policy to avert catastrophic effects on the economy and financial stability. Governments are introducing support measures in astronomical amounts to maintain employment and stop households and businesses going under. This article gives an overview of these measures and compares them between countries. We conclude by using two hypothetical cases - moderately (60%) and highly (90%) indebted economies - to illustrate how the pandemic shock may affect countries' fiscal positions for many years to come.

Suggested Citation

  • Petr Polak & Lubos Komarek & Iveta Polaskova & Pavla Netusilova, 2020. "The fiscal policy reaction to COVID-19, or the fast way out of the crisis," Occasional Publications - Chapters in Edited Volumes, in: CNB Global Economic Outlook - May 2020, pages 12-19, Czech National Bank.
  • Handle: RePEc:cnb:ocpubc:geo2020/5

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Sebastian Gechert & Ansgar Rannenberg, 2018. "Which Fiscal Multipliers Are Regime‐Dependent? A Meta‐Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 1160-1182, September.
    2. Checherita-Westphal, Cristina & Rother, Philipp, 2010. "The impact of high and growing government debt on economic growth: an empirical investigation for the euro area," Working Paper Series 1237, European Central Bank.
    3. Sebastian Gechert, 2015. "What fiscal policy is most effective? A meta-regression analysis," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 553-580.
    4. Baum, Anja & Checherita-Westphal, Cristina & Rother, Philipp, 2013. "Debt and growth: New evidence for the euro area," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 809-821.
    5. Dorine Boumans & Sebastian Link & Stefan Sauer, 2020. "Covid-19: The World Economy Needs a Lifeline – But Which One?," EconPol Policy Brief 27, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Balazs Egert, 2013. "Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality," CESifo Working Paper Series 4157, CESifo.
    2. Florian Henne, 2019. "Analyse de la soutenabilité de la dette publique au Luxembourg," BCL working papers 127, Central Bank of Luxembourg.
    3. Irina BILAN, 2014. "A Critical Analysis Of The Factors Lying Behind Recent Public Debt Accumulation In Romania," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 6(6), pages 93-105, December.
    4. Balázs Égert, 2015. "Public debt, economic growth and nonlinear effects: Myth or reality?," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 226-238.
    5. Talknice Saungweme & Nicholas M. Odhiambo, 2019. "Does Public Debt Impact Economic Growth in Zambia? An Ardl-Bounds Testing Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 69(4), pages 53-73, October-D.
    6. Horvath, Roman & Kaszab, Lorant & Marsal, Ales & Rabitsch, Katrin, 2020. "Determinants of fiscal multipliers revisited," Journal of Macroeconomics, Elsevier, vol. 63(C).
    7. Branimir Jovanovic, 2017. "Growth forecast errors and government investment and consumption multipliers," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(1), pages 83-107, January.
    8. Balazs Egert, 2013. "The 90% Public Debt Threshold: The Rise and Fall of a Stylised Fact," CESifo Working Paper Series 4242, CESifo.
    9. Hemantha Kumara & Nawalage S. Cooray, 2013. "Public Debt and Economic Growth in Sri Lanka: Is There Any Threshold Level for Pubic Debt?," Working Papers EMS_2013_22, Research Institute, International University of Japan.
    10. Lixin Sun, 2018. "Quantifying the Effects of Financialization and Leverage in China," Chinese Economy, Taylor & Francis Journals, vol. 51(3), pages 209-226, May.
    11. Balẳ Égert, 2015. "The 90% public debt threshold: the rise and fall of a stylized fact," Applied Economics, Taylor & Francis Journals, vol. 47(34-35), pages 3756-3770, July.
    12. Checherita-Westphal, Cristina & Rother, Philipp, 2012. "The impact of high government debt on economic growth and its channels: An empirical investigation for the euro area," European Economic Review, Elsevier, vol. 56(7), pages 1392-1405.
    13. Glocker, Christian & Sestieri, Giulia & Towbin, Pascal, 2019. "Time-varying government spending multipliers in the UK," Journal of Macroeconomics, Elsevier, vol. 60(C), pages 180-197.
    14. João Basilio Pereima & Manuela Merki & Fernando Motta Correia, 2016. "Economic Growth And Public Debt: Addressing Unobserved Heterogeneity," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 101, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Koffi, Siméon, 2019. "Nonlinear Impact of Public Debt on Economic Growth: Evidence from Sub-Saharan African Countries," MPRA Paper 96067, University Library of Munich, Germany, revised 17 Sep 2019.
    16. Balazs Egert, 2013. "The 90% Public Debt Threshold: The Rise & Fall of a Stylised Fact," William Davidson Institute Working Papers Series wp1048, William Davidson Institute at the University of Michigan.
    17. Baharumshah, Ahmad Zubaidi & Soon, Siew-Voon & Lau, Evan, 2017. "Fiscal sustainability in an emerging market economy: When does public debt turn bad?," Journal of Policy Modeling, Elsevier, vol. 39(1), pages 99-113.
    18. Otilia Manta, 2020. "Measures and Possible Support Solutions of the Sustainable European Economy in the Context of Actual Crises," European Journal of Marketing and Economics, European Center for Science Education and Research, vol. 3, May - Aug.
    19. Séverine MENGUY, 2019. "Does public indebtedness constrain or can it favor economic growth? A simple analytical modeling," Bulletin of Applied Economics, Risk Market Journals, vol. 6(2), pages 1-29.
    20. Achim Truger, 2015. "Implementing the golden rule for public investment in Europe," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 138, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cnb:ocpubc:geo2020/5. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jan Babecky). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.