Title page 1

Contents 5

Abstract/Résumé 4

Introduction 6

The recovery was swifter and inflation was more persistent than anticipated 8

The strength of the recovery from the pandemic was long underestimated 8

The rise of inflation was underestimated 10

Fiscal and monetary policy remained accommodative until late 2021 12

OECD policy advice evolved during the COVID-19 pandemic 15

An examination of macroeconomic policy advice during the COVID-19 pandemic 19

Vaccination campaigns were taking off with uncertain outcomes 19

The pandemic topped a period of low inflation often below target 20

Supply constraints were seen as temporary 21

National accounts at the time gave a wrong impression about the state of the recovery 21

Assessment and conclusion 24

References 26

Annex A. Additional Figures and Tables 29

Figure 1. Real-time data and projections systematically and persistently underestimated GDP 9

Figure 2. GDP was subject to significant revisions during the recovery from the pandemic 10

Figure 3. OECD inflation projections repeatedly understated actual inflation 11

Figure 4. The rise in inflation was underestimated by all major market observers 11

Figure 5. Strong deficit spending and very low interest rates remained in place until late 2021 13

Figure 6. Most Central and Eastern European countries experienced relatively high inflation 15

Figure 7. Non-euro area CEE countries started monetary tightening in 2021 15

Figure 8. Fiscal and monetary policy recommendations turned restrictive through 2021 17

Figure 9. Concerns about reallocation and the recovery dominated during most of the time 18

Figure 10. Vaccination rates rapidly increased in mid-2021, with varying rates across countries 19

Figure 11. The degree of economic slack in H1 2021 was systematically overestimated 22

Figure 12. The unemployment rate was uninformative of the output gap during the pandemic 23

Boxes 5

Box 1. Policy coordination became increasingly challenging for the euro area in 2021 14

Box 2. Economic assessments and policy advice in Economic Outlook country notes 16

Table A.1. Analysis of inflation forecast errors 32

Table A.2. Overview of Economic Survey EDRC discussion dates 32

Figure A.1. The recovery from the 2008/2009 Global Financial Crisis was much slower 29

Figure A.2. Policy advice in OECD Economic Surveys during 2020/2021 30

Figure A.3. The narrative underlying Economic Survey key recommendations changed from concerns for supporting the recovery to fiscal and debt sustainability 31