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Which crisis support fiscal measures worked during the COVID-19 shock in Europe?

Author

Listed:
  • Evi Pappa
  • Andrey Ramos
  • Eugenia Vella

Abstract

We build a new database by classifying the COVID-19 fiscal measures for twelve EU countries into seven spending categories and examine how the different support packages affected the economy. On average, fiscal measures supported the output recovery without generating significant inflationary pressures. This finding masks substantial heterogeneity: Assistance to small and medium enterprises and specific sectors contributed significantly to stimulating the economy and to maintaining inflation. Direct pandemic spending and unemployment benefits and measures to sustain employment levels generated sizeable output multipliers and had no inflationary costs. Conversely, universal help only had positive effects on inflation and transfers to households did not do much apart from affecting confidence.

Suggested Citation

  • Evi Pappa & Andrey Ramos & Eugenia Vella, 2022. "Which crisis support fiscal measures worked during the COVID-19 shock in Europe?," DEOS Working Papers 2217, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:2217
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    File URL: http://wpa.deos.aueb.gr/docs/2022.FISCAL_COVID.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    COVID-19 crisis; fiscal measures; multipliers; sentiment; transfers; assistance to SMEs; inflation;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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