News Archive

In the search for the right European financing instruments, the purported advantages of corona bonds over the ESM are meagre to non-existent, says Friedrich Heinemann (EconPol Europe, ZEW): the challenge we face is to contain the spread of COVID-19 while stabilising the economy and ensuring eurozone states have sufficient liquidity, and the ESM is a suitable tool for pursuing these ends.

Does the coronavirus crisis call for solidarity within the EU, or within the euro area: Daniel Gros (EconPol Europe, CEPS) argues that being hit by an unforeseen epidemic has nothing to do with euro area membership and the present situation is a case which requires solidarity at EU level. And, he says, there's a plausible and simple way to organise a real expression of EU solidarity without engaging in any large-scale financial transactions.

In this paper, Christian Gollier (EconPol Europe, Toulouse School of Economics University of Toulouse- Capitole) and Olivier Gossner (CNRS – CREST, Ecole Polytechnique, London School of Economics) show how group testing can be optimized in three applications to multiply the efficiency of tests against Covid-19: Estimating virus prevalence to measure the evolution of the pandemic; bringing negative groups back to work to exit the current lockdown; and testing for individual infectious status to treat sick people. 

This paper presents scenarios of the shutdown costs related to Covid-19 in terms of lost value added for Austria, France, Italy, Germany, Spain, Switzerland and UK: the shutdown phase will lead to considerable production losses and large declines in GDP this year and, lasting longer than a month, the losses within the EU quickly reach dimensions well beyond the growth slump of previous recessions or natural disasters.

António Afonso (EconPol Europe, Lisbon School of Economics and Management of the Universidade de Lisboa) has estimated the real growth rate of GDP in Portugal in 2020 and predicts a budget deficit of around 3% or 4% of GDP, implying a break and not a fiscal regime switch. Of particular relevance, he says, is private consumption and investment, with households cutting spending significantly and an increase in government spending necessary to cover the lack of domestic demand.