Gauging the economic impact of COVID-19 in Luxembourg

RECOVid is a group of economists based in Luxembourg who have joined forces to assist the Task Force for the Coordination of the Public Research Sector in the Context of the Covid-19 Pandemic (Work Package 7 led by Aline Muller, CEO of LISER). The group aims to provide knowledge on the economic issues related to the Covid-19 crisis and to suggest plans of actions to mitigate economic damages from Covid-19.

Why is this research important?

The socioeconomic aspects of this crisis are crucial for society. RECOVid aims to assess the medium- and long-term macroeconomic impact of the health crisis as well as advise on the appropriate macroeconomic policy responses.

What are the main questions addressed?

The economists’ contributions and potential recommendations are adjusted/adapted to health experts’ views. The main questions covered are:

• What are the likely effects of Covid-19 on Luxembourg’s economy?
• What can be done to maximize the likelihood of a quick recovery… and to minimize the adverse effects of the crisis on inequality, poverty and welfare?
• What are the strategies to exit the lockdown?
• What are the potential long-term effects on the economy?

Aim of the research

RECOVid aims to provide knowledge on the economic issues related to the Covid-19 crisis.Its research outputs provides a summary of ongoing research as well as back-of-the-envelope estimations of the “direct” economic impact of the health crisis and resulting policy measures. It discusses forces that may drive to a breakdown of the global economic system and policy options that are available to decision makers to mitigate the short-run costs and the risk of a systemic collapse, and provide suggestions for future research.

RECOVid also discuss some “double-edged” mechanisms that can:

(i) either jeopardize the recovery and lead to protectionist and populist pressures… or make global institutions stronger in the longer term,
(ii) either increase global inequality… or induce more solidarity between rich and poor countries,
(iii) slowdown technical progress… or accelerate a transition towards a new form of digital capitalism.

Data and quantitative analyses are obviously needed to go further. Research efforts are also underway to produce:
(i) nowcasts of the costs of the crisis,
(ii) simulation results that can inform public decisions about the relevant modalities and timing/extent of a potential restarting strategy,
(iii) analyses of the medium-term effects on the industry and occupational structure of the labor force, on income inequality and poverty, and on the adverse wealth effects for young-mid-aged adults.

Research outputs

Download the full press release on the LISER website www.liser.lu.

WATCH PROF. ALINE MULLER, CEO OF LISER PRESENT ”ECONOMIC EFFECTS OF COVID-19 IN LUXEMBOURG.”

RECOVid Team

The RECOVid study is led by a consortium of Luxembourgish research institutions, including:

• Luxembourg Institute of Socio-Economic Research (LISER)
• University of Luxembourg
• Statistics and Economic Studies of the Grand Duchy of Luxembourg (STATEC)

The team behind this RECOVid is a highly interdisciplinary consortium of economists of various social science disciplines.

RECOVid is implemented under the aegis of the Research Luxembourg COVID-19 task force.