COVID-19 Crisis and EU Economic Policy

Abstract

The corona crisis hit the European countries under great differentiation. The South European countries have not yet fully recovered from the previous systemic crisis of 2008. The COVID-19 crisis affected initially employment giving rise to one more deep global recession due to a supply shock. Despite of the fact that this crisis has a larger geographical scale, the structural differences among the EU economies, the uneven negative effects of the crisis of 2008, as well as different coping policies intensify the economic divergence. The chapter aims to detect the effects of fiscal consolidation measures/economic adjustments taken at EU level, under the 2008 economic crisis, to the impending economic crisis caused by the COVID-19 pandemic. By defining COVID-19-effect economic indexes and also using cross-section OLS estimation in EU 27 countries, the authors try to detect whether the previous economic adjustments taken at EU level did affect the COVID-19 economy, especially in the countries under fiscal policy surveillance after the crisis of 2008.