IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03403038.html
   My bibliography  Save this paper

Assessing Short‑Term and Long‑Term Economic and Environmental Effects of the COVID‑19 Crisis in France

Author

Listed:
  • Paul Malliet

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Frédéric Reynés

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Gissela Landa

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Meriem Hamdi-Cherif
  • Aurélien Saussay

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

In response to the COVID-19 health crisis, the French government has imposed drastic lockdown measures for a period of 55 days. This paper provides a quantitative assessment of the economic and environmental impacts of these measures in the short and long term. We use a Computable General Equilibrium model designed to assess environmental and energy policies impacts at the macroeconomic and sectoral levels. We find that the lockdown has led to a significant decrease in economic output of 5% of GDP, but a positive environmental impact with a 6.6% reduction in CO2 emissions in 2020. Both decreases are temporary: economic and environmental indicators return to their baseline trajectory after a few years. CO2 emissions even end up significantly higher after the COVID-19 crisis when we account for persistently low oil prices. We then investigate whether implementing carbon pricing can still yield positive macroeconomic dividends in the post-COVID recovery. We find that implementing ambitious carbon pricing speeds up economic recovery while significantly reducing CO2 emissions. By maintaining high fossil fuel prices, carbon taxation reduces the imports of fossil energy and stimulates energy efficiency investments while the full redistribution of tax proceeds does not hamper the recovery.

Suggested Citation

  • Paul Malliet & Frédéric Reynés & Gissela Landa & Meriem Hamdi-Cherif & Aurélien Saussay, 2020. "Assessing Short‑Term and Long‑Term Economic and Environmental Effects of the COVID‑19 Crisis in France," Post-Print hal-03403038, HAL.
    • Handle: RePEc:hal:journl:hal-03403038
    DOI: 10.1007/s10640-020-00488-z
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03403038
    as

    Download full text from publisher

    File URL: https://sciencespo.hal.science/hal-03403038/document
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s10640-020-00488-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Aubert, Diane & Chiroleu-Assouline, Mireille, 2019. "Environmental tax reform and income distribution with imperfect heterogeneous labour markets," European Economic Review, Elsevier, vol. 116(C), pages 60-82.
    2. Maliszewska,Maryla & Mattoo,Aaditya & Van Der Mensbrugghe,Dominique, 2020. "The Potential Impact of COVID-19 on GDP and Trade : A Preliminary Assessment," Policy Research Working Paper Series 9211, The World Bank.
    3. Hafstead, Marc A.C. & Williams, Roberton C., 2018. "Unemployment and environmental regulation in general equilibrium," Journal of Public Economics, Elsevier, vol. 160(C), pages 50-65.
    4. Gissela Landa Riveria & Paul Malliet & Aurélien Saussay, 2014. "Les impacts macroéconomiques de la transition énergétique," SciencePo Working papers Main hal-01708496, HAL.
    5. World Bank, "undated". "The Economy in the Time of Covid-19 [La Economía en los Tiempos del Covid-19]," World Bank Publications - Reports 33555, The World Bank Group.
    6. Warwick McKibbin & Roshen Fernando, 2021. "The Global Macroeconomic Impacts of COVID-19: Seven Scenarios," Asian Economic Papers, MIT Press, vol. 20(2), pages 1-30, Summer.
    7. Bulavskaya, Tatyana & Reynès, Frédéric, 2018. "Job creation and economic impact of renewable energy in the Netherlands," Renewable Energy, Elsevier, vol. 119(C), pages 528-538.
    8. Reynès Frédéric G. & Paul Malliet, 2017. "Assessing Low Carbon and Resilient Growth in Indonesia: An application of the ThreeME model," Working Papers hal-01708487, HAL.
    9. Editorial, 2020. "Covid-19 and Climate Change," Journal, Review of Agrarian Studies, vol. 10(1), pages 5-6, January-J.
    10. Dieter Helm, 2020. "The Environmental Impacts of the Coronavirus," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(1), pages 21-38, May.
    11. Glen P. Peters & Gregg Marland & Corinne Le Quéré & Thomas Boden & Josep G. Canadell & Michael R. Raupach, 2012. "Rapid growth in CO2 emissions after the 2008–2009 global financial crisis," Nature Climate Change, Nature, vol. 2(1), pages 2-4, January.
    12. Cameron Hepburn & Brian O’Callaghan & Nicholas Stern & Joseph Stiglitz & Dimitri Zenghelis, 2020. "Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(Supplemen), pages 359-381.
    13. Cameron Hepburn & Brian O’Callaghan & Nicholas Stern & Joseph Stiglitz & Dimitri Zenghelis, 0. "Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?," Oxford Review of Economic Policy, Oxford University Press, vol. 36(Supplemen), pages 359-381.
    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. repec:hal:spmain:info:hdl:2441/6neh4df2kq9orrjiscv6839f6n is not listed on IDEAS
    2. David Klenert & Franziska Funke & Linus Mattauch & Brian O’Callaghan, 2020. "Five Lessons from COVID-19 for Advancing Climate Change Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 751-778, August.
    3. Philippe Le Billon & Païvi Lujala & Devyani Singh & Vance Culbert & Berit Kristoffersen, 2021. "Fossil fuels, climate change, and the COVID-19 crisis: pathways for a just and green post-pandemic recovery," Climate Policy, Taylor & Francis Journals, vol. 21(10), pages 1347-1356, November.
    4. Samson Mukanjari & Thomas Sterner, 2020. "Charting a “Green Path” for Recovery from COVID-19," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 825-853, August.
    5. Angela Köppl & Margit Schratzenstaller, 2022. "Macroeconomic Effects of Green Recovery Programmes. Conceptual Framing and a Review of the Empirical Literature," WIFO Working Papers 646, WIFO.
    6. Weronika Jakubczak & Anna Golebiowska & Dariusz Prokopowicz & Ryszard Jakubczak, 2021. "The Key Security Problems Related to the Pro-Environmental Economic Transformation and the Implementation of the Principles of Sustainable Development into the Economy," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 218-250.
    7. Gustav Engström & Johan Gars & Niko Jaakkola & Therese Lindahl & Daniel Spiro & Arthur A. van Benthem, 2020. "What Policies Address Both the Coronavirus Crisis and the Climate Crisis?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 789-810, August.
    8. C. A. K. Lovell, 2021. "The Pandemic, The Climate, and Productivity," CEPA Working Papers Series WP112021, School of Economics, University of Queensland, Australia.
    9. Edward B. Barbier, 2020. "Greening the Post-pandemic Recovery in the G20," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 685-703, August.
    10. Anna Golebiowska & Weronika Jakubczak & Dariusz Prokopowicz & Ryszard Jakubczak, 2021. "The Post-Pandemic Development of the Green Circular Economy and the Declarations Made During the UN Climate Change Conference (COP26) as Security Determinants," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 251-275.
    11. Manuel Duarte Pinheiro & Nuno Cardoso Luís, 2020. "COVID-19 Could Leverage a Sustainable Built Environment," Sustainability, MDPI, vol. 12(14), pages 1-28, July.
    12. Paul Lehmann & Silke Beck & Mariana Madruga de Brito & Erik Gawel & Matthias Groß & Annegret Haase & Robert Lepenies & Danny Otto & Johannes Schiller & Sebastian Strunz & Daniela Thrän, 2021. "Environmental Sustainability Post-COVID-19: Scrutinizing Popular Hypotheses from a Social Science Perspective," Sustainability, MDPI, vol. 13(16), pages 1-21, August.
    13. Fankhauser, Samuel & Kotsch, Raphaela & Srivastav, Sugandha, 2020. "The readiness of industry for a transformative recovery from COVID 19," LSE Research Online Documents on Economics 106995, London School of Economics and Political Science, LSE Library.
    14. Robert J. R. Elliott & Ingmar Schumacher & Cees Withagen, 2020. "Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 1187-1213, August.
    15. Patrycja Klusak & Matthew Agarwala & Matt Burke & Moritz Kraemer & Kamiar Mohaddes, 2023. "Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness," Management Science, INFORMS, vol. 69(12), pages 7468-7491, December.
    16. Agarwala, Matthew & Burke, Matt & Klusak, Patrycja & Mohaddes, Kamiar & Volz, Ulrich & Zenghelis, Dimitri, 2021. "Climate Change And Fiscal Sustainability: Risks And Opportunities," National Institute Economic Review, National Institute of Economic and Social Research, vol. 258, pages 28-46, November.
    17. Zhu Liu & Zhu Deng & Philippe Ciais & Jianguang Tan & Biqing Zhu & Steven J. Davis & Robbie Andrew & Olivier Boucher & Simon Ben Arous & Pep Canadel & Xinyu Dou & Pierre Friedlingstein & Pierre Gentin, 2021. "Global Daily CO$_2$ emissions for the year 2020," Papers 2103.02526, arXiv.org.
    18. Stern, Nicholas & Valero, Anna, 2021. "Innovation, growth and the transition to net-zero emissions," Research Policy, Elsevier, vol. 50(9).
    19. Apostolou, Apostolos & Papaioannou, Michael, 2021. "Towards Greening Finance: Integration of Environmental Factors in Risk Management & Impact of Climate Risks on Asset Portfolios," MPRA Paper 106779, University Library of Munich, Germany.
    20. Carla Barlagne & Mariana Melnykovych & David Miller & Richard J. Hewitt & Laura Secco & Elena Pisani & Maria Nijnik, 2021. "What Are the Impacts of Social Innovation? A Synthetic Review and Case Study of Community Forestry in the Scottish Highlands," Sustainability, MDPI, vol. 13(8), pages 1-25, April.
    21. Massimiliano Mazzanti & Antonio Musolesi, 2020. "Modeling Green Knowledge Production and Environmental Policies with Semiparametric Panel Data Regression models," SEEDS Working Papers 1420, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Sep 2020.

    More about this item

    Keywords

    Carbon tax; CO2 emissions; Macroeconomic modeling; Neo-Keynesian CGE model; Post-COVID economy;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:hal:journl:hal-03403038. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.