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The impact of COVID-19 on potential output in the euro area

Author

Listed:
  • Bodnár, Katalin
  • Le Roux, Julien
  • Lopez-Garcia, Paloma
  • Szörfi, Béla

Abstract

The coronavirus (COVID-19) pandemic almost certainly affected potential output negatively via various channels, affecting the trends of total factor productivity, capital and labour. Quantitative estimates show that euro area potential growth will likely stall or even decline in 2020 and the pace of the recovery is highly uncertain, as it depends on whether the shock is temporary or persistent. Comprehensive policy measures are playing a crucial role in preventing hysteresis in the euro area economy and long-term economic scarring. JEL Classification: E22, E23, E24, E32, O11, O40

Suggested Citation

  • Bodnár, Katalin & Le Roux, Julien & Lopez-Garcia, Paloma & Szörfi, Béla, 2020. "The impact of COVID-19 on potential output in the euro area," Economic Bulletin Articles, European Central Bank, vol. 7.
    • Handle: RePEc:ecb:ecbart:2020:0007:1
    Note: 2881411
    as

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    Citations

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    Cited by:

    1. Assaf Razin, 2021. "Globalization And Global Crises: Israel And The Rest Of The World," Israel Economic Review, Bank of Israel, vol. 19(1), pages 103-134.
    2. Assaf Razin, 2021. "Globalization and Global Crises: Rest of the World vs. Israel," NBER Working Papers 28339, National Bureau of Economic Research, Inc.
    3. Harasztosi, Péter & Maurin, Laurent & Pál, Rozália & Revoltella, Debora & van der Wielen, Wouter, 2022. "Firm-level policy support during the crisis: So far, so good?," International Economics, Elsevier, vol. 171(C), pages 30-48.
    4. Júlio, Paulo & Maria, José R., 2024. "Trends and cycles during the COVID-19 pandemic period," Economic Modelling, Elsevier, vol. 139(C).
    5. Guillochon, Justine & Le Roux, Julien, 2023. "Unobserved components model(s): output gaps and financial cycles," Working Paper Series 2832, European Central Bank.
    6. Birindelli, Giuliana & Miazza, Aline & Paimanova, Viktoriia & Palea, Vera, 2023. "Just “blah blah blah”? Stock market expectations and reactions to COP26," International Review of Financial Analysis, Elsevier, vol. 88(C).
    7. Josef Baumgartner & Serguei Kaniovski & Marian Fink & Hans Pitlik & Silvia Rocha-Akis, 2021. "Strong Private Consumption Spurs Economic Growth. Medium-term Forecast of the Austrian Economy 2022 to 2026 Including the Tax Reform 2022 2024," WIFO Reports on Austria, WIFO, issue 13, November.
    8. Archanskaia, Elizaveta & Canton, Erik & Hobza, Alexandr & Nikolov, Plamen & Simons, Wouter, 2023. "The asymmetric impact of COVID-19: A novel approach to quantifying financial distress across industries," European Economic Review, Elsevier, vol. 158(C).
    9. Cobus Vermeulen, 2023. "The inherent uncertainties in output gap estimation a South African perspective," Working Papers 11051, South African Reserve Bank.
    10. Timo Wollmershäuser & Przemyslaw Brandt & Christian Grimme & Max Lay & Robert Lehmann & Sebastian Link & Manuel Menkhoff & Sascha Möhrle & Ann-Christin Rathje & Pauliina Sandqvist & Radek Šauer & Marc, 2021. "ifo Konjunkturprognose Sommer 2021: Deutsche Wirtschaft im Spannungsfeld zwischen Öffnungen und Lieferengpässen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(Sonderaus), pages 01-52, June.
    11. Josef Baumgartner & Serguei Kaniovski & Marian Fink & Hans Pitlik & Silvia Rocha-Akis, 2021. "Starker privater Konsum treibt das Wirtschaftswachstum. Mittelfristige Prognose 2022 bis 2026 unter Berücksichtigung der Steuerreform 2022/2024," WIFO Monatsberichte (monthly reports), WIFO, vol. 94(10), pages 711-736, October.

    More about this item

    Keywords

    COVID-19; output gap; Potential output; production function;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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