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The structural economic impact of the COVID-19 pandemic on the euro area: a literature review

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  • Maya Jollès
  • Eric Meyermans

Abstract

This section provides a brief literature review of the structural economic impact of the COVID-19 pandemic on the euro area. The pandemic and the risk of its recurrence are expected to increase private savings and lower private investment and in so doing exert additional downward pressure on interest rates and inflation. Downward risks to the well-functioning of markets are expected to stem from scarring effects caused by the underutilisation of labour and capital, lack of investment and distortions of global supply chains. Upward risks are expected to arise from the acceleration of the ongoing transformations such as digital workplaces, e-commerce and FinTech services. A recovery path out of the COVID-19 crisis based on a large-scale economic transformation that favours the green and digital transition is generally expected to temper the adverse legacy of the COVID-19 crisis.

Suggested Citation

  • Maya Jollès & Eric Meyermans, 2021. "The structural economic impact of the COVID-19 pandemic on the euro area: a literature review," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 20(1), pages 7-21, February.
    • Handle: RePEc:euf:qreuro:0201-01
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    File URL: https://economy-finance.ec.europa.eu/system/files/2021-02/ip146_en_chapter_i.pdf
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    Cited by:

    1. Valerie Vandermeulen & Werner Roeger, 2021. "Trend Capital when Goods and Capital Market Frictions Exist," European Economy - Discussion Papers 145, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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