In this policy paper, CJ Castillo and Marjorie Muyrong use a computable general equilibrium (CGE) model to assess the impact of various policy interventions on Philippine macroeconomic markers and household welfare during and after the COVID-19 lockdown restrictions. Findings show that household money transfers protect vulnerable consumers and corporate tax reductions under the CREATE scheme do not stimulate short-run recovery. And salary subsidies are the most successful tool for driving GDP growth and protecting employment because they directly minimize firm production costs. Therefore, the authors propose that government policy allocate salary subsidies and emergency employment over corporate tax cuts. And maintain cash transfers primarily as a social safety net while funding these expansionary measures through targeted borrowing.
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