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The risks of exiting too early the policy responses to the COVID-19 recession

Author

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  • Cassola, Nuno
  • De Grauwe, Paul
  • Morana, Claudio
  • Tirelli, Patrizio

Abstract

This policy brief warns about the risks of discontinuing the policy responses to the COVID-19 crisis by pursuing exit strategies too early and/or too sharply. It outlines a comprehensive strategy for limiting such risks globally and offers an in-depth discussion of the European situation. Due to fiscal rules written in a pre- COVID-19 era and excessive emphasis on controlling public debt ratios, the Euro Area could be left with long-lasting scars, so its situation requires special treatment. Therefore, we articulate some policy proposals designed to preserve and strengthen the recovery in the EMU.

Suggested Citation

  • Cassola, Nuno & De Grauwe, Paul & Morana, Claudio & Tirelli, Patrizio, 2022. "The risks of exiting too early the policy responses to the COVID-19 recession," LSE Research Online Documents on Economics 113327, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:113327
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    File URL: http://eprints.lse.ac.uk/113327/
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    References listed on IDEAS

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    Cited by:

    1. Fernandes, Mário Correia & Dutra, Tiago Mota & Dias, José Carlos & Teixeira, João C.A., 2023. "Modelling output gaps in the Euro Area with structural breaks: The COVID-19 recession," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1046-1058.

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    More about this item

    Keywords

    Covid-19 pandemic; Euro area; fiscal and monetary policy mix; G20; regulatory policies; sovereign and corporate crises; Covid-19; coronavirus;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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