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Germany’s Macroeconomic Drivers Through the COVID-19 Pandemic and Recovery Period

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  • Stefan Hohberger

Abstract

This paper estimates a three-region structural macroeconomic model to analyse the main drivers of GDP, inflation, and wage growth through the COVID-19 pandemic and recovery period in Germany. By incorporating COVID-related shocks, trade in commodities, and endogenous ELB periods, the estimation results suggest: (i) the COVID-19 pandemic in 2020-21 was mainly driven by domestic and foreign lockdown shocks (demand-driven), (ii) the inflation surge in 2021-22 was characterised by an increase in commodity prices, a recovery of global demand, and pronounced supply-side factors, and (iii) wage growth per hour was counterbalanced by competing demand and supply-side effects. Key estimated shocks in the model closely match off-model indicators, supporting its empirical plausibility.

Suggested Citation

  • Stefan Hohberger, 2024. "Germany’s Macroeconomic Drivers Through the COVID-19 Pandemic and Recovery Period," CAMA Working Papers 2024-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2024-48
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2024-08/48_2024_hohberger.pdf
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    More about this item

    Keywords

    COVID-19; business cycle; inflation; open-economy DSGE model; Bayesian estimation; Germany;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • 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
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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