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Some Macroeconomic Consequences of COVID-19: Specifics of the 2020 World Economic Crisis

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  • Valery V. Kizilov

    (Financial Research Institute, Moscow 127006, Russian Federation)

Abstract

In 2020, almost all large countries experienced a decline in GDP and other indicators of economic activity. This trend followed the news about the COVID-19 pandemic and had several features typical for cyclical economic crises. At the starting point, both demand and supply factors were negatively affected. This paper looks into data on GDP, retail sales and foreign trade dynamics in the first nine months of 2020, and analyzes the difference between developed and developing countries. Specific phenomena are observed: Germany and its small neighbors had relatively mild crises; developed countries had their trade balances deteriorating; the trade between the USA and China revived; and American deficit has been growing since April 2020. Some hypotheses to explain the above are offered. For instance, the German economy might have been able to adapt swiftly due to greater freedom of entrepreneurship than in France and Italy and due to the lowest debt ratios among G7 countries. The trade balances of developed countries deteriorated, possibly, because of a decline in production as a result of anti-COVID lockdowns, with consumption encouraged by stimulating policy measures.

Suggested Citation

  • Valery V. Kizilov, 2021. "Some Macroeconomic Consequences of COVID-19: Specifics of the 2020 World Economic Crisis," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 9-27, February.
    • Handle: RePEc:fru:finjrn:210101:p:9-27
    DOI: 10.31107/2075-1990-2021-1-9-27
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    References listed on IDEAS

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    1. Pierre-Olivier Gourinchas & Ṣebnem Kalemli-Özcan & Veronika Penciakova & Nick Sander, 2020. "SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis," NBER Working Papers 27877, National Bureau of Economic Research, Inc.
    2. Pragyan Deb & Davide Furceri & Jonathan D. Ostry & Nour Tawk, 2022. "The Economic Effects of COVID-19 Containment Measures," Open Economies Review, Springer, vol. 33(1), pages 1-32, February.
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    Cited by:

    1. Vyacheslav Yu. Dodonov, 2022. "COVID-19 Pandemic as a Factor of Public Debt Increase. The Case of Kazakhstan in the Global Context," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 92-107, August.
    2. A. A. Zinchenko & S. A. Radionov, 2023. "Analysis of the Effects Produced by Trade Liberalization in the Republic of Uzbekistan and the EAEU," Studies on Russian Economic Development, Springer, vol. 34(1), pages 142-149, February.

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    More about this item

    Keywords

    economic crisis; economic cycle; supply shock; foreign trade; public debt; investment climate; economic freedom; COVID-19;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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