Spain | The Stabilizing Effects of Economic Policies in Times of COVID-19

Summary

In this Working Paper we analyze the stabilizing role that economic policies have played during the current COVID-19 crisis in Spain.

Key points

• Key points:
• First, we estimate the contribution of the structural shocks that explain the behaviour of the main macroeconomic aggregates during 2020, using a DSGE model estimated for the Spanish economy.
• Second, we have simulated a counterfactual scenario for GDP in absence of the COVID-19 economic policy measures. According to our results, the annual fall in GDP moderates at least by 7.6 points in the most intense period of the crisis, thanks to these stabilizing policies.
• Finally, we have estimated the potential effects of Next Generation EU in the Spanish economy. Assuming that Spain may receive from the EU between 1.5 and 2.25 percentage points of GDP in grants and loans from 2021 to 2024, to finance mainly public investment, GDP could increase between 2 and 3 pp in 2024.

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