VoxEU & CEPR Coverage of the Covid-19 Global Pandemic

Gilbert Cette, Jimmy Lopez, Jacques Mairesse, Giuseppe Nicoletti, 02 December 2020

The COVID-19 crisis has highlighted the importance of the swift reorganisation of tasks and logistics in cushioning economic shocks. While it is too early to study the effects of managerial talent on resilience to the COVID-19 crisis, useful insights can be drawn from the experience of the Great Recession. This column shows that countries with a higher quality of management before the Great Recession have been more able to limit employment losses. This was achieved through the ability to moderate real wage growth.

Assaf Hamdani, Konstantin Kosenko, Yishay Yafeh, 02 December 2020

Pyramidal groups – tiered structures where an apex firm controls multiple tiers of subsidiaries – allow a small number of powerful individuals or families to dominate many Asian, European and Latin American economies. This column examines the experiences of four countries that adopted measures to dismantle or limit the power of pyramids: the US in the 1930s, Japan under American occupation, Korea in the 1990s, and Israel in the last decade. It concludes that to successfully address concerns of arising from the concentration of economic power and curb the influence of large corporate entities, it is important to implement multiple regulatory tools which can address economy-wide, rather than industry-specific, economic power.

David Welsch, 01 December 2020

The science behind mask usage and its ability to reduce airborne particles seems clear. Despite this, many individuals are sceptical that wearing masks can reduce the spread of COVID-19 and many refuse to wear one even when required. This column examines the effect of mask usage using county-level data from the US, employing an instrumental variable approach. The findings show that increasing the amount of individuals who frequently or always wear a mask when within six feet of people by 1% could reduce COVID-19 deaths by 10.5%, which translates into approximately six deaths in the average county. 

Rachel Griffith, Peter Levell, Agnes Norris Keiller, 01 December 2020

On 31 January 2020 the UK formally left the EU after over 40 years of membership. On 31 December, the UK’s transition period will come to an end and the UK and EU will establish a new trading relationship with greater trade frictions. At the time of writing, the terms of this relationship remain unclear. However, since the EU is by far the UK’s largest trading partner, the implications for the UK economy are likely to be profound. This column discusses potential consequences for the labour market – and earnings inequality – in the UK.

Kim Abildgren, Andreas Kuchler, 01 December 2020

The extent to which negative monetary policy interest rates stimulate the economy has a subject of recent discussion among academics and policymakers. Using new comprehensive Danish microdata, this column shows that firms exposed to negative deposit rates to a higher degree than other firms increase their fixed investments and employment – after due control for changes in the level of interest rates. These findings are suggestive of an additional monetary transmission channel operating as nominal interest rates cross zero and become negative.

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