Departmental Papers

Who Bore the Brunt of the Pandemic in Europe? Shifting Private Stress to the Public Sector

ByMarco Arena, Ruo Chen, Alfredo Cuevas, Karim Foda, Borja Gracia, Miss Estelle X Liu, Alex Pienkowski, Christiane Roehler, Shituo Sun, Sebastian Weber, Yu Shi

July 15, 2021

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Marco Arena, Ruo Chen, Alfredo Cuevas, Karim Foda, Borja Gracia, Miss Estelle X Liu, Alex Pienkowski, Christiane Roehler, Shituo Sun, Sebastian Weber, and Yu Shi. "Who Bore the Brunt of the Pandemic in Europe? Shifting Private Stress to the Public Sector", Departmental Papers 2021, 015 (2021), accessed 12/5/2025, https://doi.org/10.5089/9781513577494.087

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Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In Europe, the severe human toll of the COVID-19 pandemic was compounded by the deepest fall in economic activity in modern history. Yet this huge decline in output did surprisingly little damage to the aggregate financial balance sheets of firms and households. This paper discusses how unprecedented policy support transferred private sector income losses to the public sector’s balance sheet and contrasts this experience to that of the global financial crisis.

Subject: Asset and liability management, Asset valuation, COVID-19, Economic sectors, Financial crises, Financial statements, Global financial crisis of 2008-2009, Health, International organization, Political economy, Public financial management (PFM), Public sector

Keywords: Asset valuation, Business Fluctuations, Consumption, COVID-19, Europe, Financial statements, Global, Global financial crisis of 2008-2009, household balance sheet stress, NFC balance sheet stress, NFC leverage, private sector stress, Public sector, Saving, stress to the public sector, Wealth

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