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Output Losses in Europe During COVID-19: What Role for Policies?

Author

Listed:
  • Mr. Anil Ari
  • Jean-Marc B. Atsebi
  • Mar Domenech Palacios

Abstract

We use a decomposition methodology to analyze the factors underlying the differentiated output losses of European countries in 2020. Our findings are fourfold: First, 2020 growth outcomes can be explained by differences in mobility, underlying growth trends, and pre-pandemic country fundamentals. Second, fiscal and monetary policies helped alleviate output losses during the pandemic in all European countries but to a varying extent. Third, shallower recessions in emerging market economies in Europe can be attributed to higher underlying growth and younger populations. Fourth, fiscal multipliers were higher in countries where above-the-line measures accounted for a larger share of the total fiscal package, the size of the total fiscal package was smaller, and inequality and informality were greater, as well as in countries with IMF-supported program during the pandemic.

Suggested Citation

  • Mr. Anil Ari & Jean-Marc B. Atsebi & Mar Domenech Palacios, 2022. "Output Losses in Europe During COVID-19: What Role for Policies?," IMF Working Papers 2022/130, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/130
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