Karol Szomolányi, Martin Lukáčik, Adriana Lukáčiková, Faculty of Economic Informatics, University of Economics in Bratislava, Slovak Republic

Pages: 38 – 58

Abstract

The paper identifies the main economic shocks associated with the COVID-19 pandemic outbreak in the second quarter of 2020. A simple two-period real business cycle model is used for the verification of the theoretical impacts of shocks. The response of the global economy to the pandemic outbreak is measured by the deviations of key variables from the log-quadratic trend in the surveyed period in U.S. and EU economies. By comparing the theoretical impacts of shocks with the actual reaction, it can be stated that the pandemic outbreak was mainly associated with the sectoral shock. The corresponding economic downturn cannot be explained without the presence of the productivity shock, but a decline in the total factor productivity by more than 4% is not expected.