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The scarring effects of past crises on the global economy

Author

Listed:
  • Martín Fuentes, Natalia
  • Moder, Isabella

Abstract

This box aims to assess the long-term implications of past crises for the global economy’s potential output and to discuss potential scarring effects of the coronavirus (COVID-19) pandemic. Starting with a review of past crises and the transmission channels through which potential output is affected, it concludes that the pandemic could leave scarring effects on the global economy, with labour supply likely to be initially hit the most. However, effects on the capital stock are potentially more relevant over the medium to long term. JEL Classification: C23, E22, E23, E24, E32, O11, O40

Suggested Citation

  • Martín Fuentes, Natalia & Moder, Isabella, 2021. "The scarring effects of past crises on the global economy," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2021:0008:1
    Note: 2769592
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2021/html/ecb.ebbox202008_01~e038be4510.en.html
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    Citations

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    Cited by:

    1. Péter Benczúr & István Kónya, 2022. "Convergence to the Centre," Contributions to Economics, in: László Mátyás (ed.), Emerging European Economies after the Pandemic, chapter 0, pages 1-51, Springer.
    2. Garcia-Rodriguez, Abian & Bergin, Adele & Rehill, Luke & Sweeney, Éamonn, 2021. "Exploring the impact of COVID-19 and recovery paths for the economy," Papers WP706, Economic and Social Research Institute (ESRI).
    3. Oussama Abi Younes & Sumru Altug, 2021. "The COVID-19 Shock: A Bayesian Approach," JRFM, MDPI, vol. 14(10), pages 1-15, October.
    4. Dany Brouillette & Guyllaume Faucher & Martin Kuncl & Austin McWhirter & Youngmin Park, 2021. "Potential output and the neutral rate in Canada: 2021 update," Staff Analytical Notes 2021-6, Bank of Canada.

    More about this item

    Keywords

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

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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