Richard Hughes, 29 March 2020

The coronavirus outbreak requires action from governments around the world. This includes policies to protect the health of citizens and to support the economy, all while safeguarding governments’ financial stability. This column draws on experiences from past viral outbreaks to outline ten lessons for calibrating the correct policy response. Funding for health care systems should be prioritised, and targeted support for households and businesses is crucial. The rising costs and decreasing revenues for governments will also be challenging, and will likely require assistance from central banks as well as international and regional institutions. 

Antonio De Vito, Juan-Pedro Gomez, 29 March 2020

The coronavirus pandemic has endangered the liquidity position of not only SME firms, but also large listed firms. This column uses firm-level data from 26 countries to study how long it may take for these listed firms to become cash constrained, and what kind of interventions would be most effective. It concludes that while bridge loans would cost governments almost twice as much as a six-month tax deferral, the policy seems justified given the higher efficacy in preventing a global cash crunch. 

Ana Venâncio, Victor Barros, Clara Raposo, 29 March 2020

Corporate tax is often seen as a constraint to entrepreneurial activity. This column uses evidence from a tax reform in Portugal to study the relationship between corporate taxes and the behaviour of entrepreneurs. Lower corporate taxes improve both the quantity and quality of entrepreneurial activity, inducing larger and more productive firms to the market, which are more likely to survive in the long term. The study suggests that, on average, the entrepreneurs who were able to take advantage of the reform are mostly male, relatively older, and well-educated individuals.

Vyacheslav Fos, Naser Hamdi, Ankit Kalda, Jordan Nickerson, 29 March 2020

The growth of the gig economy has renewed debates about how to regulate employers who provide neither health insurance nor social security benefits to their employees. Using a combination of Uber product launch dates and employee-level data on job separations, this column finds that employees who are laid off from their formal occupations but have access to Uber are less likely to rely on unemployment insurance. Instead, gig labour provides a safety net as they search for more permanent work in the formal market.

Richard Barwell, Jagjit Chadha, Michael Grady, 29 March 2020

Doing ‘whatever it takes’ does not mean the Bank of England has to undermine long-run monetary and financial stability. This column outlines the options faced by the Bank of England in supporting the economy during the COVID-19 Crisis including closer coordination with fiscal policy.

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