Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247681 
Year of Publication: 
2021
Series/Report no.: 
Deutsche Bundesbank Discussion Paper No. 43/2021
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
We simulate the fiscal stimulus packages set up by the German government to allevi-ate the costs of the COVID-19 pandemic in a dynamic New Keynesian multi-sectorgeneral equilibrium model. We find that, cumulated over 2020-2022, output lossesrelative to steady state can be reduced by more than 4 PP. On average, welfare costsof the pandemic can be mitigated by 5%, and even by 20% for liquidity-constrainedhouseholds. The long-run present value multiplier of the package amounts to 0.2. Consumption tax cuts and transfers to households primarily stabilize private con-sumption, and subsidies prevent firm defaults. The most cost-efficient measure isan increase in productivity-enhancing public investment. However, it materializesonly in the medium to long-term.
Subjects: 
Fiscal Policy
COVID-19
DSGE Modelling
Sectoral Heterogeneity
JEL: 
E1
E2
E62
H2
H30
ISBN: 
978-3-95729-851-5
Document Type: 
Working Paper

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