Support for those not affected: How macroeconomic policies have shaped COVID's impact on sectoral activity

ABSTRACT

Considering the different dynamics of the COVID-triggered real shocks and macroeconomic measures during the first two waves of the pandemic, using official quarterly data for 2020 the paper studies how economic support measures have impacted the economic performance of sectors in EU countries. The paper shows that (1) for all analysed sectoral groups, the economic support measures effects were much smaller than the corresponding non-pharmaceutical interventions impacts;(2) sectoral groups did not receive economic support in proportion to the corresponding nonpharmaceutical interventions;(3) sectoral groups with greater non-pharmaceutical interventions did not receive even systematically bigger effects of the economic support measures;and (4) the net overall effects of the COVID-triggered measures on sectoral value added vary considerably between sectors. By evaluating the potential opportunity costs of the ‘flat' economic support activity, the study's results also help to identify measures that could eventually be implemented once the pandemic has ended to mitigate the potential opportunity costs of the sector non-specific implementation of economic support measures, which will become apparent in the recovery period following the pandemic. © 2022 Economic Society of Australia, Queensland