{"title":"Effects of Covid-19 on Euro area GDP and inflation: demand vs. supply disturbances.","authors":"Robert Kollmann","doi":"10.1007/s10368-021-00516-3","DOIUrl":null,"url":null,"abstract":"<p><p>This paper analyzes the macroeconomic effects of the Covid-19 epidemic on Euro Area (EA) GDP and inflation, using a stylized New Keynesian model. Covid is interpreted as a combination of aggregate demand and aggregate supply disturbances. Offsetting aggregate demand and supply changes are shown to account for the stability of EA inflation, in the face of Covid. The evidence presented here indicates that Covid-induced aggregate demand and supply shifts were persistent. An aggregate supply contraction is identified as the dominant force driving the sharp fall of EA GDP in 2020.</p>","PeriodicalId":42639,"journal":{"name":"INTERNATIONAL ECONOMICS AND ECONOMIC POLICY","volume":"18 1","pages":"475-492"},"PeriodicalIF":1.5000,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8477729/pdf/","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"INTERNATIONAL ECONOMICS AND ECONOMIC POLICY","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s10368-021-00516-3","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"2021/9/28 0:00:00","PubModel":"Epub","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This paper analyzes the macroeconomic effects of the Covid-19 epidemic on Euro Area (EA) GDP and inflation, using a stylized New Keynesian model. Covid is interpreted as a combination of aggregate demand and aggregate supply disturbances. Offsetting aggregate demand and supply changes are shown to account for the stability of EA inflation, in the face of Covid. The evidence presented here indicates that Covid-induced aggregate demand and supply shifts were persistent. An aggregate supply contraction is identified as the dominant force driving the sharp fall of EA GDP in 2020.
期刊介绍：
The double-blind peer reviewed Journal International Economics and Economic Policy publishes empirical and theoretical contributions, especially papers which are relevant for economic policy. The main focus of the journal is on comparative economic policy, international political economy, including international organizations and policy cooperation, monetary and real/technological dynamics in open economies, globalization and regional integration, trade, migration, international investment, internet commerce and regulation.IEEP particularly offers contributions from the policy community and provides a forum for exchange for the academic and policy community. Officially cited as: Int Econ Econ Policy
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