COVID-19 in US Economy: Structural Analysis and Policy Proposals

Abstract

Based on an input–output framework, this paper analyses the intersectoral structure of the US economy and estimates the COVID-19 multiplier effects on this economy. For this purpose we employ a model of matrix multipliers—which, except for the technical conditions of production, also considers imports, income distribution, savings, and consumption patterns—using data from the input–output table of the US economy for the year 2015, i.e., the latest available data at the time of this research (a few months after the US presidential election). Furthermore, we detect the key commodities that are considered appropriate for implementing economic policies in the short term, i.e., for boosting growth and job creation, as well as the commodities that are suitable for long-term, structural policies. Our findings suggest that short-term policies for a direct recovery after COVID-19 should be based on public consumption expenditures and investments as well as through exports. It is also shown that there is a great variety of short-term and long-term policies that can be adjusted according to the challenges of the US economy. Finally, for reasons of completeness, we estimate the impact of the main plans of the American president’s policy program, i.e., the “American Jobs Plan and the American Families Plan”, and we show that both plans would cumulatively increase the US output by about USD 6.07 trillion over the next ten years, not only helping the US economy recover from the COVID-19 shock but also ensuring macroeconomic stability and social cohesion.