The Impact of COVID on Potential Output
Abstract: The level of potential output is likely to be subdued post-COVID relative to its previous estimates. Most clearly, capital input and full-employment labor will both be lower than they previously were. Quantitatively, however, these effects appear relatively modest. In the long run, labor scarring could lead to lower levels of employment, but the slow pre-recession pace of GDP growth is unlikely to be substantially affected.
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Description: Full text – article PDF
Provider: Federal Reserve Bank of San Francisco
Part of Series: Working Paper Series
Publication Date: 2021-03-22