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GTAP Resource #7290

"Evaluating the welfare costs of the COVID-19 -pandemic in Finland with an AGE model of with Intergenerational Accounting"
by Honkatukia, Juha and Risto Vaittinen

The COVID-19 pandemic has tested the resilience of all countries. This paper focusses on Finland. We study the distributional effects from the points of view of gender and household income in the short run, and from the point of view of intergenerational income distribution in the long run, when the economy is already facing the many challenges of an aging population. The effects of the pandemic have been smaller in Finland and other Nordic countries than in many other countries. We study the effects in 2020 and 2021 by means of a decomposition – historical – simulation, which allows us to see which sectors of the economy were most affected. We show that the economic effects in Finland thus far have stemmed from the measures taken to counter the spread of the pandemic, such as closing down public venues, restricting travel and the availability of the hospitality industry, as much as from an initial fall in exports.

We also study the long-run impacts form the point of view of fiscal sustainability. By mid-2021, the Finnish economy had regained her 2019 level. This was made possible by the recovery of the export industries, but also of private consumption. Remarkably, household income grew steadily even during the pandemic, reflecting the effective safety-nets of a Nordic welfare state. But this comes with a cost – government debt is soaring, and tackling the debt is inevitably becoming an agenda. We study several possible measures the government could be taking from the point of view of inter-generational income distribution. The range from raising taxes to cutting public spending.

Our analyses utilise an intergenerational CGE model, which integrates transfer accounting to a cohort-specific modelling of households.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Created: Honkatukia, J. (4/15/2024)
Updated: Honkatukia, J. (5/29/2024)
Visits: 56
- Other data bases and data issues
- Government austerity
- Demographics
- Labor market issues
- Dynamic modeling
- Europe (Northern)

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