Mehdi Shiva, 26 April 2020

Hospitals around the world are struggling to cope with large waves of COVID patients requiring attention at the same time as providing their regular services to non-COVID patients. This column describers how a failure to invest in public health and access to health care has meant that much of the world is ill-equipped to detect viral threats, protect frontline health care workers, and treat those who fall ill. More capital investment is needed to give health systems a head start for when the next pandemic strikes. 

Petr Sedláček, Vincent Sterk, 25 April 2020

Startups are being hit hard by the COVID-19 pandemic and the lockdown. Introducing a ‘startup calculator’ that allows anyone to compute the aggregate employment losses under various economic scenarios, this column explores the effects of a decline in startup activity on aggregate employment. Job losses may be large and may last well beyond the pandemic itself.

Andreas Joseph, Christiane Kneer, Neeltje van Horen, Jumana Saleheen, 26 April 2020

Many firms are facing an unprecedented turnover shock as the corona pandemic unfolds. According to this column, insights from the global financial crisis suggest that firms with high levels of cash going into a crisis are not only better placed to weather the downturn but can improve their competitive positions in the long run. During the financial crisis, cash-rich firms were able to continue to invest while industry rivals without cash had to divest. This led to a shift in competition dynamics, allowing cash-rich firms to outperform their rivals when the economy recovered.

Olivier Blanchard, 24 April 2020

Will falling commodity prices, stumbling oil prices, and a depressed labour market bring low inflation and perhaps even deflation, or will very large increases in fiscal deficits and central bank balance sheets bring inflation? This column argues that it is hard to see strong demand leading to inflation. Precautionary saving is likely to play a lasting role, leading to low consumption, and uncertainty is likely to lead to low investment. The challenge for monetary and fiscal policy is thus likely to be to sustain demand and avoid deflation rather than the reverse.

Eddy Bekkers, Alexander Keck, Robert Koopman, Coleman Nee, 24 April 2020

Among its many regrettable effects, Covid-19 will also have a strong impact on international trade. Forecasting potential trade effects is important for policymaking. This column develops a range of scenarios in a dynamic CGE model to simulate possible trajectories for GDP. It then generates short-term forecasts of trade for various regions and the world using time-series analysis. The outlook for 2020 is bleak with trade possibly declining by between 13% and 32%. Some recovery is expected in 2021.

Thorsten Beck, Wolf Wagner, 24 April 2020

While COVID-19 is a global pandemic, the policy responses so far have been almost exclusively national. This column uses a theoretical model to analyse national containment policies in an integrated world. The findings suggest that the first-best solution is global coordination on public health responses, including domestic containment policies. In the absence of ability to coordinate on the global level, regional coordination is called for.

Tatiana Didier, Federico Huneeus, Mauricio Larrain, Sergio Schmukler, 24 April 2020

The COVID-19 pandemic has nearly halted economic activity worldwide. Firm cash flows have collapsed, triggering inefficient bankruptcies as firms' valuable relationships are broken. This column proposes hibernation could allow firms to survive the pandemic, while preserving their vital relationships. All stakeholders could share the burden of economic inactivity, helping more firms to survive. However, financial systems are not well equipped to handle this type of exogenous and synchronised systemic shock so governments should work with the financial sector to keep firms afloat.

Laurence Boone, Álvaro Santos Pereira, 27 April 2020

The crisis faced by Europe is extraordinary and requires extraordinary responses. It is also a unique opportunity for Europe, and in particular the EMU, to consolidate its economic and financial architecture and to promote Europe as the engine of “shared prosperity”. This column argues that a significantly reinforced and revamped ESM or a new financial instrument based on joint issuance are possible vehicles to translate words into action. 

Jérôme Adda, Ghazala Azmat, Andrea Ichino, Tommaso Monacelli, Moritz Schularick, 23 April 2020

The COVID-19 pandemic is one of the defining moments of our times from both a social and economic perspective. The correct understanding of the economics of this crisis is essential to provide policy solutions to attenuate its impact. Standard economist tools can also contribute to the understanding of the social factors that contribute to the spread of the disease. With the aim of answering this question, the Managing Editors of Economic Policy are opening a call for papers for a special issue on “The Economics of COVID-19” to bring together the best ideas to inform the debate and provide high-impact policy advice.

Andrea Galeotti, Paolo Surico, Jakub Steiner, 23 April 2020

While many aspects of testing for Covid-19 fall under the domain of epidemiologists, biochemists, virologists and other natural scientists, there are important concepts, such as the allocation of testing, for which an economic framework can help. This column discusses the informational value of testing and makes the distinction between individual and collective value, both of which depend on the characteristics of the virus, the phase of the epidemic, the instruments available to control the spread, and the reliability of the test. It concludes with a proposal for a sequential testing strategy.

Graziella Bertocchi, 23 April 2020

As countries gradually loosen lockdown restrictions, there will be increased urgency to determine which segments of the population are least susceptible to COVID-19 and should return to work first. This column re-examines the data on women in Italy and finds that working-age women are more susceptible to the disease than working-age men, likely due to women’s over-representation in jobs – namely, health and education – that expose them to a higher risk of contagion. Policies that count on women replacing men as lockdowns lift could aggravate the problem rather than solve it.

Henry Overman, 22 April 2020

The economic crisis caused by COVID-19 will play out unequally across areas. Unfortunately, the unusual nature of this crisis makes its local impacts hard to predict. This complicates attempts to formulate appropriate area-based policy responses. This column focuses on the UK and argues that, in the short run, we will need to target immediate support through existing mechanisms to reach people who are most vulnerable to the impacts of the current crisis. Doing this will also help the most vulnerable communities where these people live.

Patrick Bolton, Lee Buchheit , Pierre-Olivier Gourinchas, Mitu Gulati, Chang-Tai Hsieh, Ugo Panizza, Beatrice Weder di Mauro, 21 April 2020

Many low- and middle-income countries may face problems servicing their external debts while addressing the COVID-19 emergency. Urgent action is needed to prevent disorderly defaults and litigations. This column presents a mechanism to implement a debt standstill which would free significant resources to cover some of the most immediate costs of the COVID-19 crisis.

Gabriele Ciminelli, Sílvia Garcia-Mandicó, 22 April 2020

Among the many unknowns about COVID-19 are its true mortality rate and the speed at which it spreads across communities. This column analyses daily death registry data for a sample of 1,161 Italian municipalities in the seven regions most severely hit by COVID-19.  The findings suggest that the virus may have killed 0.1% of the local population in just over a month and that its mortality is vastly underreported in official statistics, plausibly by a factor of two. But there is also good news for policymakers – in the Veneto region, which has embraced mass testing, contact tracing, and at-home care provision, COVID-19-induced mortality is significantly lower than in neighbouring Emilia-Romagna and Lombardia.

Monika Queisser, Willem Adema, Chris Clarke, 22 April 2020

Unlike most previous economic crises, this crisis has the potential to do disproportionate damage to women’s jobs and incomes. This column describers how confinement and distancing measures are threatening to shatter several female-dominated industries, including retail, accommodation services, and food and beverage service activities. This puts many women’s jobs at risk. And even when they do not work in ‘at-risk’ industries, many women are struggling to balance work with the additional care responsibilities caused by school and childcare closures. When formulating policy responses to the crisis, it is crucial that governments do not ignore the impact the crisis can, is, and will have on women’s lives. 

Claudia Hupkau, Barbara Petrongolo, 22 April 2020

The social distancing and lockdowns associated with the COVID-19 crisis has hit service sectors with frequent interactions between consumers and providers which cannot be done from home. At the same time, it has added education and childcare services to pre-existing home production needs.  This column combines survey data from the UK with occupation classifications to show that that – unlike previous recessions – the current crisis is harming women’s labour market prospects more than those of men and that women are also likely to be on the receiving end of the bulk of increased home production requirements.

Daniel Gros, 22 April 2020

Consensus is forming in Europe that a united response to the coronavirus crisis is needed. Multiple proposals for a ‘solidarity fund’ have been made, along with suggestions for how to finance it. This column argues that a one-time EU-wide levy on financial assets could raise €300-400 billion, and thus finance a European Solidarity Fund. This levy would be non-distortionary, could be implemented quickly through financial intermediaries, and would avoid the need for controversial Coronabonds.

Alexis Akira Toda, 21 April 2020

The COVID-19 epidemic will not end until populations acquire herd immunity either because a vaccine is developed or a sufficiently large share of the population has been infected and recovered. This column argues that the draconian mitigation measures currently taken by many governments may be suboptimal because they prevent the building of herd immunity while incurring significant economic costs. A more targeted approach, such as that of Sweden or ‘optimally delayed mitigation’, may be preferable.

Roberto Perotti, 21 April 2020

In response to the pandemic, several proposals have been advanced to mobilise large amounts at the European level, mostly to address the needs of periphery countries. This column argues that because these proposals do not take into account the preoccupations of core countries, the outcome is likely to be general disappointment and recriminations. It offers an alternative proposal, based on the notion that periphery countries are much better equipped to make it on their own than is commonly thought, with a little help from the ECB.

Agnès Bénassy-Quéré, Ramon Marimon, Philippe Martin, Jean Pisani-Ferry, Lucrezia Reichlin, Dirk Schoenmaker, Beatrice Weder di Mauro, 20 April 2020

The EU has been slow to formulate its response to the Covid crisis. Fortunately, things have started to change. The EU’s leaders should finish work on the new borrowing facilities, first by clarifying the maturities of the borrowings, and second by being prepared to beef up their amounts if needed. It is also crucial to find ways to jointly finance priority action and to provide support to countries worst affected by the crisis in order to restart their own economies. The objective of a Recovery Initiative should be to repair and reconstruct the EU economy: to repair corporate balance sheets and value chains; and to reconstruct the economy on a new, sustainable basis through investment in common public goods such as research, resilience, and the greening of the economy. This will involve targeted investment, coordinated restructuring in some sectors, and the introduction of an equity fund to help SMEs survive the crisis. 

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