Distributional effects of macroeconomic shocks in real-time
A novel method applied to the Covid-19 crisis in Germany
Bibliographic Data
| ID | 12836664 |
|---|---|
| Authors | Kerstin Bruckmeier (0000-0002-4797-7543, Federal Employment Agency, corresponding author), Andreas Peichl (0000-0002-0680-8321, Ifo Institute for Economic Research), Martin Popp (0000-0002-9097-9798, Institut für Arbeitsmarkt und Berufsforschung), Jürgen Wiemers (0000-0002-3863-7168, Institut für Arbeitsmarkt und Berufsforschung), Timo Wollmershäuser (Ifo Institute for Economic Research) |
| Year | 2021 |
| Volume | 19 |
| Issue | 3 |
| Pages | 459-487 |
| Publication date | 2021-09-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Inequality (JOURNAL) |
| Journal identifiers | ISSN: 1569-1721 • E-ISSN: 1573-8701 |
| Publisher | Springer Science+Business Media (PUBLISHER • DE) |
| DOI | 10.1007/s10888-021-09489-4 |
| OpenAlex | W3199517143 |
| Language | EN |
| Citations received | 5 |
| References cited | 30 |
The highly dynamic nature of the COVID-19 crisis poses an unprecedented challenge to policy makers around the world to take appropriate income-stabilizing countermeasures. To properly design such policy measures, it is important to quantify their effects in real-time. However, data on the relevant outcomes at the micro level is usually only available with considerable time lags. In this paper, we propose a novel method to assess the distributional consequences of macroeconomic shocks and policy responses in real-time and provide the first application to Germany in the context of the COVID-19 pandemic. Specifically, our approach combines different economic models estimated on firm- and household-level data: a VAR-model for output expectations, a structural labor demand model, and a tax-benefit microsimulation model. Our findings show that as of September 2020 the COVID-19 shock translates into a noticeable reduction in gross labor income across the entire income distribution. However, the tax benefit system and discretionary policy responses to the crisis act as important income stabilizers, since the effect on the distribution of disposable household incomes turns progressive: the bottom two deciles actually gain income, the middle deciles are hardly affected, and only the upper deciles lose income
Econometrics · Economics · Keynesian economics · Monetary economics · Shock (circulatory · Financial Literacy, Pension, Retirement Analysis · Fiscal Policies and Political Economy · Monetary Policy and Economic Impact
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| Citations per year | 1 |
|---|---|
| Citation span | 2021 - 2025 (5) |
| Highly cited | No |