Policy support played a major role in cushioning EU corporates from the impact of the COVID-19 pandemic, according to a STAREBEI research grant conducted by Wolfram Horn and Leonardo Indraccolo, from the European University Institute, which findings were presented at the EIB in November 2022.

As the pandemic was a major shock with uneven impact across sectors of the economy, most EU countries deployed specific policies to support firms during the crisis.

The researchers developed a dynamic model calibrated using granular data for the EU’s four largest economies (Germany, France, Italy and Spain). The simulations show that targeted policy support helped to reduce employment loss by up to 45%. Moreover, the impact on productivity was limited due to large adjustment costs. While estimated adjustment costs are not that different across countries, differences in firms’ attitude (optimists vs pessimists) play a major role in role in explaining the responsiveness to the crisis.

The research was mentored by Professor Russell Cooper (EUI) and Laurent Maurin (EIB Economics Department). Click here for the presentation.

This was the second STAREBEI research with EUI presented in 2022 following a research on “The EIB at the origins of a European environmental policy”.

STAREBEI (STAges de REcherche BEI-EIB research internships) is a programme that provides grants to universities to finance junior researchers carrying out research projects proposed by the EIB Group (EIB and EIF) under the joint supervision of a university tutor and an EIB or EIF co-tutor.

To date, 66 young researchers from 41 universities in 14 European countries have benefited from the STAREBEI programme.