Kam Chan, Terry Marsh, 03 April 2020

The lockdowns in place around the world will result in substantial economic collateral damage. This column looks at stock market reactions prior to and after six prominent historical crises. Equity market prices like the Dow Index are negatively impacted by increases in uncertainty. The business ramifications of regulatory policies, subsidies and so on put in place to contain the spread of COVID-19 posing the greatest uncertainty in the current crisis.

Giancarlo Corsetti, Emile Marin, 03 April 2020

In crises, the dollar tends to appreciate – especially against emerging market currencies – and dollar liquidity becomes scarce. This column shows that today’s events are following the historical pattern. Forex market turmoil is preceded by an inversion of the US yield curve as investors, anticipating tough times ahead, require relatively high short-term yields and an appreciation of relatively risky currencies until the disaster occurs. Then, the dollar appreciates sharply. Then, emerging markets suffer massive capital flight. What’s new about the COVID-19 crisis is its scale and speed.

Nora Lustig, Nancy Birdsall, 02 April 2020

The pandemic has created a new, brutal inequality: between those who have a steady source of income and those who do not. This column provides some examples of how the plight of the latter is inspiring a new kind of informal, people-to-people social protection. While this is not a substitute for a publicly financed social safety, it can fill critical gaps and foster the solidarity and trust that is key to citizens’ support for more comprehensive social protection during the next crisis.

Christian Gollier, Stephane Straub, 02 April 2020

Economists have long argued that there is a conflict between the need to make individuals and companies accountable on the one hand, and the need to share risks effectively on the other. This column, the first in a three-part series, argues that in the context of COVID-19, the reluctance to share risk based on ‘moral hazard’ has no reason to exist, and discusses how the socialisation of losses could be implemented.

Joan Costa-i-Font, 02 April 2020

The response to the COVID-19 pandemic has varied widely across the EU, member states following their own self-interests and limited coordination. This column argues that an independent public health agency could help overcome problems of collective action. 

Richard Baldwin, Rebecca Freeman, 01 April 2020

COVID-19 containment policies first shuttered factories in China. Since manufacturers around the world rely on Chinese inputs, Chinese industrial disruption hit other nations via ‘supply-chain contagion’. As China's economy gears back up, fhe fast spread of cases in the two other manufacturing giants, Germany and America, are likely to create reverse supply-chain contagion – the industrial equivalent of reinfection. International coordination may reduce the chances that multiple waves of supply-chain contagion hobble global manufacturing.

Mark Stabile, Bénédicte Apouey, Isabelle Solal, 01 April 2020

While some countries have provided assistance to workers unable to perform tasks from home during the COVID-19 pandemic, certain categories of workers tend to fall through the cracks of these programmes. This column reports the findings of a survey of precarious workers in France, including gig economy workers such food delivery bikers. Traditional gig economy workers with incomes under €1,000 a month were more likely to keep working despite the highly elevated health risk of doing so, suggesting that the support in place is leaving some low-income workers exposed.

Giulia Giupponi, Camille Landais, 01 April 2020

Short-time work is a subsidy for temporary reductions in the number of hours worked in firms affected by temporary shocks. Evidence suggests that it can have large positive effects on employment and can be more effective than unemployment insurance or universal transfers. This column discusses how the COVID-19 crisis – with its mandated reduction in hours of work and massive liquidity crunch for firms – is a textbook case for the use of short-time work. Taking into account available evidence and the current situation, it proposes guidelines to effectively implement short-term work.

Simon Burgess, Hans Henrik Sievertsen, 01 April 2020

The global lockdown of education institutions is going to cause major (and likely unequal) interruption in students’ learning; disruptions in internal assessments; and the cancellation of public assessments for qualifications or their replacement by an inferior alternative. This column discusses what can be done to mitigate these negative impacts.

Eduardo Levy Yeyati, 31 March 2020

Dollar shortages and the real consequences of the COVID pandemic may lead to the next wave of emerging market debt crises. This column argues that Fed swaps mitigate this shortage only for a few selected countries, and traditional international financial institutions’ products are ill-designed to assist an emerging market facing a sudden stop. As a broker between central banks and emerging economies, the IMF has a unique opportunity to complete the international financial architecture and fill the lender of last resort role that has long eluded it.

Romesh Vaitilingam, 31 March 2020

With severe lockdowns in place across much of the world to counter the spread of the coronavirus, the IGM Forum at Chicago Booth invited its panel of leading US economists to express their views on interactions between containment measures and economic activity, and the need for public investment to support the medical response to the health emergency. This column reveals a strong consensus among the experts that abandoning lockdowns prematurely will cause greater economic damage in the longer term. There is also unanimity on the need for more US government spending on expanding treatment capacity: building temporary hospitals, accelerating testing, making more masks and ventilators, and providing financial incentives for the production of a successful vaccine.

Beatrice Weder di Mauro, Charles Wyplosz, 30 March 2020

Since the onset of the Covid outbreak, the economics profession has been extraordinarily reactive on traditional and social media. This column introduces “Covid Economics, Vetted and Real-Time Papers”, a collection of research papers from CEPR which will bring together more formal investigations, based on explicit theory and/or empirical evidence, to improve knowledge.

David Miles, 30 March 2020

In response to the current economic crisis, central banks have embarked on operations to purchase huge quantities of government bonds. Accusations that these policies amount to ‘printing money’ or ‘helicopter drops’ are unfounded and misleading. This column argues that the asset purchase operations undertaken when interest rates are very low can help greatly in stabilising the economy. These actions allow governments to issue long-term bonds, incur low effective costs in the near horizon, and avoid volatile financial markets. 

Shigeru Fujita, Giuseppe Moscarini, Fabien Postel-Vinay, 30 March 2020

The COVID-19 pandemic represents an unprecedented shock to labour markets. This column argues that the policy response should balance two objectives: (1) facilitating prompt reallocation of employment to essential activities during the emergency, and (2) maintaining workers’ attachment to their previous employers, preserving the aggregate stock of firm-specific human capital, and avoiding persistent mismatch, which would propagate the temporary shock into a prolonged stagnation. The authors make concrete labour market policy proposals and compare them with measures currently being implemented on both sides of the Atlantic.

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. 

Lorenzo Bini Smaghi, 28 March 2020

Since the outbreak of COVID-19 in Europe, calls have been made by academics, politicians and observers to adopt Eurobonds to finance the actions needed to support economic activity. This column argues that the proposal poses two important political challenges. The first is to promote a broad transfer of economic and social competences from the national to the European level. The second is to reform the European Stability Mechanism and ensure that a sufficient number of countries apply so as to avoid stigma.

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. 

Daniel Gros, 28 March 2020

The increasingly draconian measures that European governments have put in place to control the spread of COVID-19 have been taken without reliable information on the true spread of the disease. This column argues that it would be possible to quickly organise an EU-wide survey test of a representative sample of the entire population using an existing panel of European households. This would yield key data on the spread of the disease, for example by showing whether suppression is still possible. Having reliable data which are comparable across countries would also be indispensable for any exit strategy from the internal border controls which have proliferated as the crisis spread.

Emanuel Ornelas, 28 March 2020

Countries worldwide are implementing lockdown measures to contain the COVID-19 pandemic. Very soon, the question will be how to lift the lockdowns while keeping the epidemic in check. This column uses basic economic principles to shed light on the key trade-offs. A central message is that there is no ‘health versus economics’ dichotomy. Rather, some degree of lockdown is typically optimal in a crisis like this, balancing economic costs against health benefits. Moreover, the optimal level of lockdown is dynamic, changing over time and eventually becoming more lenient.



CEPR Policy Research