The stabilizing effects of economic policies in Spain in times of COVID-19

Purpose This paper aims to analyse the stabilizing macroeconomic effects of economic policies during COVID-19 crisis in Spain. Design/methodology/approach The contribution structural shocks that explain behaviour main aggregates 2020 are estimated, and simulated using a dynamic stochastic general equilibrium (DSGE) model estimated for Spanish economy. Findings results highlight importance supply demand explaining crisis. annual fall gross domestic product (GDP) moderates at least by 7.6 points most intense period crisis, thanks these policies. Finally, potential Next Generation EU economy estimated. Assuming Spain may receive from between 1.5 2.25 percentage (pp) GDP, activity could increase 2 3 pp 2024. Originality/value To best authors’ knowledge, exercises findings original. All show usefulness DSGE model, such as rational expectation Spain, practical tool applied analysis, assessment understanding