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What Comes Next?

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  • Daniel Rees

Abstract

The Covid crisis prompted an unprecedented global economic contraction. Although the worst is likely behind us, the recovery is likely to be uneven, with economic activity in many customer-facing service industries set to remain constrained for some time. I use a quantitative multi-industry model to estimate the economic forces that explain the decline in economic activity in the United States, the Euro Area, Japan and China in the first half of 2020. I then use the model to project the trajectory of the economic recovery. I find that the US, EA and Japan will each face a '98% economy' if half of the constraints faced by customer-facing service industries in the first half of 2020 persist. The economic recovery in China is projected to occur more quickly.

Suggested Citation

  • Daniel Rees, 2020. "What Comes Next?," BIS Working Papers 898, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:898
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    1. Hinterlang, Natascha & Moyen, Stephane & Röhe, Oke & Stähler, Nikolai, 2023. "Gauging the effects of the German COVID-19 fiscal stimulus package," European Economic Review, Elsevier, vol. 154(C).
    2. Alejandro Fernández Cerezo, 2023. "A supply-side GDP nowcasting model," Economic Bulletin, Banco de España, issue 2023/Q1.
    3. Phurichai Rungcharoenkitkul, 2021. "Macroeconomic effects of COVID‐19: A mid‐term review," Pacific Economic Review, Wiley Blackwell, vol. 26(4), pages 439-458, October.
    4. Iñaki Aldasoro & Sebastian Doerr & Leonardo Gambacorta & Daniel Rees, 2024. "The impact of artificial intelligence on output and inflation," BIS Working Papers 1179, Bank for International Settlements.
    5. Satoshi Tanaka, 2022. "Economic Impacts of SARS/MERS/COVID‐19 in Asian Countries," Asian Economic Policy Review, Japan Center for Economic Research, vol. 17(1), pages 41-61, January.

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    More about this item

    Keywords

    structural change; macroeconomic outlook; model projection;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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