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The Effects of Fiscal Measures During COVID-19

Author

Listed:
  • Ostry, Jonathan D.
  • Deb, Pragyan
  • Furceri, Davide
  • Tawk, Nour
  • Yang, Naihan

Abstract

This paper empirically examines the effects of fiscal policy measures during the COVID-19 pandemic, using a novel database of daily fiscal policy announcements—classified by type of fiscal measure—and high-frequency economic indicators for 52 countries from January 1 to December 31, 2020. The results suggest that fiscal policy announcements have been effective in stimulating economic activity, boosting confidence, and reducing unemployment, but their effect varies by type of measure and country characteristics. Emergency lifeline measures (which form the bulk of below-the-line measures) are more effective when containment policies are stringent, providing cashflow support to firms and households. Demand-support measures (which comprise most of above-the-line measures) are more effective when containment measures are relaxed.

Suggested Citation

  • Ostry, Jonathan D. & Deb, Pragyan & Furceri, Davide & Tawk, Nour & Yang, Naihan, 2021. "The Effects of Fiscal Measures During COVID-19," CEPR Discussion Papers 16726, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16726
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    Cited by:

    1. Quang Nguyen Tran, 2023. "What Contribute to the Growth of EV Automakers’ Valuation? The Case of Tesla and Nio," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 15(7), pages 1-35, July.
    2. LEONIDA, Ionel & CEPOI, Cosmin Octavian, 2022. "Challenges For Fiscal Policy After The Mitigation Of The Covid-19 Pandemic," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 10(1), pages 8-15, October.
    3. Hale, Galina & Leer, John & Nechio, Fernanda, 2025. "Fiscal policy design and inflation: The COVID-19 pandemic experience," Santa Cruz Department of Economics, Working Paper Series qt9cc4c34z, Department of Economics, UC Santa Cruz.
    4. Paul Labonne & Leif Anders Thorsrud, 2023. "Risky news and credit market sentiment," Working Papers No 14/2023, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    5. Philipp Heimberger, 2022. "The Cyclical Behaviour of Fiscal Policy During the Covid-19 Crisis," wiiw Working Papers 220, The Vienna Institute for International Economic Studies, wiiw.
    6. Jakub Borowski & Krystian Jaworski, 2023. "Economic and behavioral determinants of forced household savings during the COVID-19 pandemic," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(1), pages 237-253, February.
    7. Hale, Galina & Leer, John & Nechio, Fernanda, 2022. "Inflationary Effects of Fiscal Support to Households and Firms," Santa Cruz Department of Economics, Working Paper Series qt8qt1t3t4, Department of Economics, UC Santa Cruz.
    8. Ignat Ignatov, 2023. "Convergence Determinants and Club Formation in the EU over 1999-2021," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 37-63.
    9. Brault, Julien, 2023. "Recent trends in EU corporate demography and policy: COVID and beyond," EIF Working Paper Series 2023/90, European Investment Fund (EIF).
    10. Bole, Velimir & Prašnikar, Janez & Rop, Anton, 2023. "Support for those not affected: How macroeconomic policies have shaped COVID’s impact on sectoral activity," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 265-280.
    11. Konstantins Benkovskis & Olegs Tkacevs & Karlis Vilerts, 2023. "Did Job Retention Schemes Save Jobs during the Covid-19 Pandemic? Firm-level Evidence from Latvia," Working Papers 2023/03, Latvijas Banka.
    12. Heimberger, Philipp, 2023. "This time truly is different: The cyclical behaviour of fiscal policy during the Covid-19 crisis," Journal of Macroeconomics, Elsevier, vol. 76(C).

    More about this item

    Keywords

    Fiscal policy; Covid-19; Multipliers; High-frequency data;
    All these keywords.

    JEL classification:

    • 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
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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