Macroeconomic implications of the COVID-19 revisited
Macroeconomic implications of the COVID-19 revisited

Author(s): Tadeusz Kowalski
Subject(s): Economy, Supranational / Global Economy, Economic development
Published by: Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu
Keywords: complete macroeconomic model;COVID-19 vs demand and supply shocks;macroeconomics of the COVID-19 disturbances;anti-crisis economic policy;
Summary/Abstract: Purpose: The chapter identifies channels of COVID-19’s impact on the economy. The empirical part presents and assesses the consecutive reactions of inflation, industrial production, the unemployment rate, Gross Domestic Product (GDP) growth rate and shifts in GDP expenditurestructure on the COVID-driven disturbances and policies designed and implemented. A new research dimension covers the central banks’ monetary policy, long-term bond yields and real effective exchange rates. Design/methodology/approach: A complete standard Keynesian macroeconomic model isused as the conceptual framework of revisited studies on the adverse shocks triggered by the pandemic. In the empirical part, comparative analyses of reactions of the same group of six European countries, namely France, Germany, Italy, Spain, Hungary and Poland and two major large open economies of the USA and Japan are done. Findings: The real shocks transmitted to the demand and supply sides were mostly neutralised; countries protected their levels of employment and consumption. However, the real economy’s restored stability was achieved at a significant cost of inflation, higher public debtand hikes in the cost of debt servicing. Practical implications: The analytical framework and empirical analyses have a potential value as a case study in economic policy design and appraisal. Originality and value: The original empirical analyses extended to the monetary policy domain offer a comprehensive perspective on the real and nominal disturbances and policies implemented to stabilise the economies.

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