Impact of Economic Policy Measures to Mitigate the COVID-19 Crisis. Micro- and Macroeconomic Analyses of the Cyclical, Fiscal and Distributional Effects

This ex-ante analysis examines the cyclical, fiscal and distributional effects of the income support and investment measures adopted in the wake of the COVID-19 crisis at three successive levels: the micro, macro and sectoral-regional level. Measures to support private households increase disposable incomes by 3.1 billion €, of which 23.0 percent is allocated to the lower income third, 31.8 percent to the middle income third and 45.2 percent to the upper income third. Of the 4.3 billion € in wage replacement benefits from short-time work ("Kurzarbeit"), 15.4 percent goes to households in the lower income third, 37.6 percent to those in the middle income third and 47.2 percent to those in the upper income third. Around 187,000 jobs are safeguarded through short-time work, and a further 13,000 to 21,000 through the other measures. Overall, real GDP is 0.5 to 1 percent higher than it would have been without the measures. Trade benefitted most from the measures for private households, and manufacturing and construction from the business support measures.