Economic Crisis Predictors Revisited in Preparation for the COVID-19 Aftermath

In this chapter we aim at revisiting the Economic crisis predictors empirical literature by focusing on unemployment, adding new predictors, and using novel analytical tools. More specifically, we use insights from the latest (2008–2014) crisis in order to draw conclusions and, possibly, policy implications about the imminent COVID-19 crisis. Using Panel Data for EU-28 countries, we complement the list of “traditional” predictors (such as Public Debt, GDP per capita, and Competitiveness) by adding an Inequality/Poverty index along with an Index to represent how heavily regulated Product and Labor Markets are in various countries (i.e., a proxy for the cumulative impact of implemented structural reforms). At the same time, we place emphasis on taking into account the countercyclical economic policy mix most countries (and Central Banks) opted to implement during the years of the crisis. Inequality/poverty stands out as the most important predictor thus validating previous findings. Relevant policy implications are drawn regarding a potential policy agenda to alleviate the impact of the new crisis currently unfolding.