Claudia Biancotti, Alfonso Rosolia, Fabrizio Venditti, Giovanni Veronese, 12 April 2020

The COVID-19 lockdown will negatively impact businesses and households around the world not only through its direct effects on economic activity and employment, but also indirectly by the disrupting the flow of crucial information. This column suggests some channels through which national statistical institutes and other public agencies, private data brokers, and Big Tech companies can harness the full potential of their access to data.

Olivier Blanchard, Jean Pisani-Ferry, 10 April 2020

The extraordinary operations that are under way in most countries in response to the COVID-19 shock have raised fears that large-scale monetisation will result in a major inflation episode. This column argues that so far, there is no evidence that central banks have given up, or are preparing to give up, on their price stability mandate. While there are obviously some reasons to worry, central banks are doing the right thing and the authors see no reason to panic.

John Muellbauer, 11 April 2020

The coronavirus pandemic has triggered unprecedented shocks to both supply and demand, raising important questions about the impact on US consumer spending. In the US, consumption comprised as much as 70% of GDP in 2019. Typically, consumption is less volatile than income. But as this column argues, it is now likely to fall even more than household income. One reason is that part of the negative shock originates in disruption to consumption itself. Another comes from the jump in income insecurity as reflected in an unprecedented rise in the unemployment rate. Other reasons include the fall in asset prices and a sharp contraction in credit availability. A plausible scenario from the analysis suggests that US real consumer spending in the second quarter of 2020 could fall by around 20%, if household labour income falls by 16%.

Fernando Leibovici, Ana Maria Santacreu, Makenzie Peake, 13 April 2020

The COVID-19 pandemic is creating a massive shortage of medical equipment. To face the health crisis, the US needs to increase its supply of protective equipment, and equipment needed to treat infected patients. This column studies the extent to which the US relies on other countries to supply its demand for critical medical goods. Given its heavy reliance on other countries also affected by COVID-19, the US might need to urgently design policies to boost its production of these goods.

Masayuki Morikawa, 10 April 2020

Japan, similar to many countries hit by the COVID-19 shock, has experienced a sudden increase in people working from home. This column exploits the teleworking arrangements implemented at the author’s workplace to investigate the impact on productivity. In a survey, workers indicate that they are, on average, less productive at home than in the office. While some of the reasons for this, such as lack of familiarity with remote access software, will fade over time, other factors suggest that a productivity gap will remain.

Samuel Bowles, Wendy Carlin, 10 April 2020

Like the Great Depression and WWII, the COVID-19 pandemic (along with climate change) will alter how we think about the economy and public policy, not only in seminars and policy think tanks, but also in the everyday vernacular by which people talk about their livelihoods and futures. It will likely prompt a leftward shift on the government-versus-markets axis. But more important, it may overturn that anachronistic one-dimensional menu of policy alternatives by including approaches drawing on social values going beyond compliance and material gain to include ethical motivations of solidarity and duty that underpin community.

Romesh Vaitilingam, 10 April 2020

The lockdowns in place around the world to limit the contagion of Covid-19 have been implemented without reliable information on the spread of the disease or the prevalence of the novel coronavirus in the population. The IGM Forum at Chicago Booth invited its panel of leading US economists to express their views on the role of testing for infections and antibodies to inform decisions about easing measures on social distancing and allowing the return of public activities. This column reveals a strong consensus among the experts on the value of random testing to establish baseline levels of the virus, and near unanimity on the need for a massive increase in testing capacity as part of a clear strategy for an economic restart.

Tito Boeri, Alessandro Caiumi, Marco Paccagnella, 09 April 2020

In getting people back to work before a vaccine is developed, policymakers will have to balance medical risks and economic risks. This column presents some calculations on the number of jobs that can be carried out without putting workers at risk of being infected by COVID-19. The findings suggest that the share of jobs that can be performed without putting workers’ health at risk is limited, and probably does not reach 50%. Importantly, this share is even lower in strategic industries that supply the health sector.

Gloria Moroni, Cheti Nicoletti, Emma Tominey, 09 April 2020

The COVID-19 crisis has closed down schools around the world, leaving parents and guardians to educate their children at home. In this way as in others, the crisis will not affect all families equally, but will cause particular harm to children from low-income and less-educated households. This column suggests that socio-emotional issues in children will be amplified if their home environment is stressful, and suggests some ways that governments can mitigate that stress and support struggling families.

Òscar Jordà, Sanjay R. Singh, Alan M. Taylor, 08 April 2020

The COVID-19 pandemic is having immediately visible effects on economic activity. The rapid contraction in economic activity, the collapse of trade, and the dramatic increase in the unemployment rate are without precedent. However, pandemics also have less well-understood, longer-run effects on the natural rate of interest – a critical economic barometer and policy marker. This column reveals how historical data since the 14th century on the 15 largest pandemics suggests the real natural rate could drop by close to 1.5 percentage points over the next 20 years, a decline similar to that seen since the 1980s. There are still reasons for guarded optimism about the final death toll of COVID-19 and thus its ultimate economic impact. Perhaps this time may be different.

Debraj Ray, Sreenivasan Subramanian, Lore Vandewalle, 08 April 2020

On 24 March, the government of India ordered a nationwide lockdown of 1.3 billion people for 21 days as a preventive measure against COVID-19. Given what we know of the epidemic, it is difficult to quarrel with the prescription of social distancing and lockdown, when accompanied by state measures that provide adequate economic protection. This column asks what happens when the state is unable to provide the necessary back-up welfare measures.

Guido Alfani, 09 April 2020

The ultimate effects of the COVID-19 pandemic are impossible to foretell. This column examines major plague episodes from the past millennium to draw lessons for the current crisis. The effects of the 14th century Black Death and 17th century plagues were heterogeneous, depending on multiple epidemiological factors and initial conditions. Some regions recovered quickly, while others suffered prolonged economic damage. Dealing with the asymmetric shocks of COVID-19 and preventing similar economic collapse calls for coordination and collective action by affected countries.

Andrea Galeotti, Paolo Surico, 08 April 2020

The social distancing policies put in place by governments to control the spread of COVID-19 will not resolve the health crisis permanently, but they will buy valuable time. This column suggests that time be used to gather reliable information about how the virus spreads. Testing a representative sample of the population and linking their medical results to individual socio-demographic characteristics will allow us to identify groups most likely to be affected, thereby informing the design of health and economic policies – starting with the imminent relaxation of social distancing measures.

Tohid Atashbar, 13 April 2020

There is a growing trend as well as increasing public pressure in developing or emerging economies to follow the US and EU-led approaches to dealing with the coronavirus pandemic, without considering local economic settings. This imitation may lead to a worsening of the situation, especially if the pandemic were to last for a longer period of time. This column proposes a framework for a safer policymaking approach, especially for countries with a tighter policy space. Policy responses should be evaluated based on how the resources are generated and spent using a set of pre-defined criteria. 

Abigail Adams-Prassl, Teodora Boneva, Marta Golin, Christopher Rauh, 08 April 2020

The spread of COVID-19 has already had a large negative impact on labour supply and earnings of workers in many countries. In this column, the authors leverage newly collected data from the US and the UK to show that these negative consequences are particularly harsh for younger workers, those with unstable employment relationships and lower labour income. The evidence calls for a quick response from governments in the form of stimulus and labour income replacement packages, and a robust plan to ensure that the younger generation are not permanently disadvantaged.

Thorsten Beck, 07 April 2020

There has been a lot of discussion in recent weeks on whether an EU-wide fiscal policy response to COVID-19 should include common liability for the additional debt that such a response would imply. This column lays out the arguments in favour of such an approach – arguments that go beyond economic ones.

Jonathan Dingel, Brent Neiman, 07 April 2020

Evaluating the economic impact of ‘social distancing’ measures taken to arrest the spread of COVID-19 raises a fundamental question about the modern economy: How many jobs can be performed at home? This column describes the results of classifying the feasibility of working at home for all occupations. In the US, 37% of jobs can plausibly be performed at home.

Erik Berglöf, Gordon Brown, Jeremy Farrar, 07 April 2020

The gravity and urgency of the entwined COVID-19 public health and economic crises must be reflected in an unprecedented response. In this letter to world leaders, leading global health experts and economists outline what is needed. The two crises require urgent specific measures that can be agreed on with speed and at scale. Both require world leaders to commit to funding far beyond the current capacity of our existing international institutions. The economic emergency will not be resolved until the health emergency is effectively addressed: the health emergency will not end simply by conquering the disease in one country alone, but by ensuring recovery from COVID-19 in all countries.

Erica Bosio, Simeon Djankov, 07 April 2020

European governments are searching for ways to abate the sudden economic shock from the coronavirus pandemic. This column proposes four ideas on lessening the negative effects of the sudden economic shock on private businesses. (1) Governments may defer or waive the collection of corporate and value-added taxes to enhance liquidity. (2) Credit bureaus and registries give governments data on which businesses to target with lines of credit or other financial assistance. (3) Governments can use the procurement system to prioritise publicly funded projects. (4) Businesses should be kept as going concerns through temporary suspension of certain bankruptcy procedures.

Richard Baldwin, 07 April 2020

World trade experienced a sudden, severe, and synchronised collapse in 2008 – the steepest drop in recorded history, and the deepest fall since the Great Depression. This column argues that 2020 will show a trade collapse that is far larger since the ‘COVID concussion’ is both a demand shock and a supply shock while the 2008-09 collapse was driven mostly by a demand shock. Key learnings from the last Great Trade Collapse are highlighted.

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