The economics of State aid in times of crisis: How large is the damage?
The economics of State aid in times of crisis: How large is the damage?
Due to shelter in place orders and quarantine efforts related to the COVID-19 out-break, the world economy has come to a near halt. This international economic “pause” has already had a significant and detrimental impact on businesses across many sectors, threatening the onset of an economic recession. In response, the European Commission has published guidance regarding the use of State aid to support businesses struggling to cope financially with the COVID-19 outbreak measures.
This article explains that principles of economics can be utilised throughout the State aid notification process to:
Assess damages through the development of counterfactual scenario calculations
Minimise the distribution of illegal State aid
Determine optimal aid disbursement within aid schemes
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