Yinon Bar-On, Ofer Cornfeld, Tatiana Baron, Ron Milo, Eran Yashiv, 04 July 2020

Rapidly expanding research on COVID-19 in economics typically posits an economy subject to a model of epidemiological dynamics. This column shows that there are often serious misspecifications of the model, which erroneously assume a relatively slow-moving disease, thereby distorting the policy decisions towards less severe, delayed interventions. Moreover, the scale of the disease is underestimated.

Lubos Pastor, Blair Vorsatz, 30 July 2020

Active fund managers are widely believed to outperform during market downturns. This column uses daily returns from US active equity mutual funds to examine fund performance and investor behaviour in the midst of the COVID-19 crisis. It finds that active equity mutual funds underperform a variety of passive benchmarks, contradicting the popular belief that active managers outperform in downturns. In addition, investors have favoured sustainable funds during the crisis, suggesting that sustainability is now viewed as a necessity rather than a luxury good.

Graziella Bertocchi, Arcangelo Dimico, 29 July 2020

COVID-19 pandemic is having a disproportionate impact on African Americans, who are dying at a rate two to three times higher than their population share. This column uses a detailed individual-level dataset from Cook County, Illinois, to explore the relationship between COVID-19 mortality and race. Not only are Black Americans disproportionally affected by COVID-19, but they also started to succumb to it earlier than other groups. Such asymmetric effects can be traced back to racial segregation introduced by discriminatory lending practices in the 1930s.

Michèle Belot, Syngjoo Choi, Egon Tripodi, Eline van den Broek-Altenburg, Julian C. Jamison, Nicholas W. Papageorge, 24 July 2020

Almost all countries in the world have implemented drastic measures to contain the COVID-19 pandemic. This column documents the effects of the epidemic and containment measures using representative individual data on age and income from three Western and three Asian countries. Younger groups in all countries have been affected more, both economically and non-economically. Differences across income groups are less clear and less consistent across countries. The young are less compliant and supportive of the containment measures, no matter how hard they have been affected by them.

Isaiah Hull, 23 July 2020

The COVID-19 pandemic has placed pressure on central banks and other public institutions to monitor the economy at a higher frequency than usual. However, much of the data and expertise needed to perform such monitoring is concentrated in the private sector and academia. This column describes the effort made by the Swedish Riksbank to alleviate this bottleneck by opening up a collaborative public channel through which academics and the private sector can directly contribute to the research in real time.

Dimitris Papanikolaou, Lawrence D.W. Schmidt, 23 July 2020

COVID-19 has massively disrupted the supply side of the world economy, shutting down entire industries. This column analyses how these disruptions affected different types of firms and workers by looking at how effectively different sectors can shift to remote work. While the major policy interventions in the US have treated all types of business as equivalent, industries which are not able to do their work remotely have been hit much harder than business that can. This cross-sectional dispersion shows up across a variety of measures, including changes in employment, revenue projections, likelihood of default, current liquidity, and stock returns. Going forward, aid that targets disrupted sectors may be a more cost-effective means to alleviate the impacts of COVID-19.

Egor Malkov, 22 July 2020

The lockdown measures have brought to light the importance of the nature of work. This column discusses how teleworkability and contact intensity of different jobs both shape the distribution of risks created by the pandemic. The existing distribution of working couples suggests that two-thirds of the US ‘dual-earner’ couples are exposed to greater intra-household contagion risk. About one-fourth are exposed to greater labour income risk. Patterns in skill requirements increase the likelihood of skill mismatch for the newly unemployed. These observations have direct policy implications whilst highlighting potential constraints on their effectiveness.

Anne-Laure Delatte, Alexis Guillaume, 17 July 2020

There was a risk of another euro crisis in Spring 2020. Yet, after a massive sell-off of peripheral bonds, the markets have stabilised. This column analyses the impact of events over the last months on euro area sovereign bond spreads. It finds that differences in healthcare capacity are reflected in bond prices, markets prefer fiscal transfers to loans-based financial assistance programs, and that ECB speeches have stronger effects than deeds during the crisis episode. Of all the euro area members, Italian spreads benefited most from the recent policy interventions.

Victor Chernozhukov, Hiroyuki Kasahara, Paul Schrimpf, 15 July 2020

Faced with COVID-19, people rationally and voluntarily respond to information on risks, making it difficult to distinguish the effect of containment policies from that of voluntary behavioural responses. This column examines the effect of mandatory mask policies on COVID-19 cases and deaths in the US. If the US had on 1 April 2020 universally mandated that employees of public-facing businesses use masks, there could have been nearly 40% fewer deaths by the start of June. Containment policies had a large impact on the number of COVID-19 cases and deaths, directly by reducing transmission rates and indirectly by constraining people’s behaviour, and account for roughly half the observed change in the growth rates of cases and deaths.

Biagio Bossone, Harish Natarajan, 15 July 2020

Governments and economists are now focused on the macroeconomic policies that can support economies during the Covid-19 pandemic. Yet, for policies to be effective and economies to function, payment systems and services must operate efficiently, reliably, and securely. The third column of this series analyses the role that a central bank digital currency can play in this context, and outlines the key steps required for its successful implementation. In addition, the column proposes improvements to the existing payments infrastructure to ensure continued operability, especially in times of emergency.

Biagio Bossone, Harish Natarajan, 14 July 2020

Governments and economists are now focused on the macroeconomic policies that can support economies during the Covid-19 pandemic. Yet, for policies to be effective and economies to function, payment systems and services must operate efficiently, reliably, and securely. The second column of this series discusses the special role that government payments and international remittances play, in particular for developing economies, and identifies measures to ensure their accessibility and resilience especially at times of emergencies.

Filippo di Mauro, 10 July 2020

In the recovery from Covid-19 we urgently need to boost productivity. But which policies move the needle? Filippo di Mauro tells Tim Phillips about what CompNet's firm-level productivity data tells us about both the problem and the solution.

Biagio Bossone, Harish Natarajan, 13 July 2020

Governments and economists are now focused on the macroeconomic policies that can support economies during the Covid-19 pandemic. Yet, for policies to be effective and economies to function, payment and settlement systems and services – collectively referred to as the National Payments System – must operate efficiently, reliably, and securely. The first column of this series identifies the challenges affecting payment services during emergencies and discusses measures to ensure that payment systems keep operating. Public authorities should be proactive in mitigating risks to payment systems to support economic activity and help the public.

Christos Makridis, Jonathan Rothwell, 10 July 2020

There is significant dispersion in beliefs about the pandemic and its economic implications. This column uses new high-frequency and nationally representative data to document the overwhelming importance of political affiliation as a determinant of these beliefs and the adverse effects of partisanship on local economic activity. In the US, Republicans are significantly less worried about COVID-19 and less likely to expect a long-term disruption due to the virus. These results suggest that the macroeconomic effects of the pandemic on consumption may depend on behavioural factors, like political affiliation.

Paolo Falco, Sarah Zaccagni, 09 July 2020

Reminders to encourage social distancing have been used widely by the authorities around the world during the crisis. Based on a randomised controlled trial conducted in Denmark, this column shows what types of messages are most (and least) effective in convincing people to stay home. People’s good intentions often do not translate into the desired actions. Reminders significantly increase compliance with social distancing among people in poor health who face the greatest risks.

Chen Chen, Sudipto Dasgupta, Thanh Huynh, Ying Xia, 08 July 2020

Stay-at-home orders, when effective, can save both lives and the economy. Even though the short-term economic impact is very significant, not getting the pandemic under control can impose even higher economic costs in the future. This column studies the market reactions following staggered lockdown events across US states during Covid-19. It finds that returns on firms located in lockdown states are higher following the lockdown. These reactions can be interpreted as reflecting updated beliefs of market participants in the light of events that follow the lockdowns, such as compliance with stay-at-home orders.

Nicolas Gonne, Olivier Hubert, 08 July 2020

The shutdown of passenger air travel at the height of the COVID-19 pandemic slowed the spread of the disease but caused major economic losses for the sector. This column presents a cost-benefit analysis of the global freeze of passenger air traffic. While any conclusion is highly dependent on a handful of factors, including the controversial and difficult-to-calculate ‘value of a statistical life’, the simulations provide useful anchoring points at a time when governments are contemplating reopening air routes, as well as in the face of a potential second wave of infections.

Jean-Pierre Dube, Andrey Simonov, Szymon Sacher, Shirsho Biswas, 06 July 2020

US televised news networks offer strikingly different coverage of the COVID-19 pandemic, the exposure risks, and the benefits of social distancing measures recommended by health experts. This column devises an empirical strategy to test for a causal effect of news viewership on compliance with social distancing. It finds a large effect of local Fox News viewership on local compliance, with a persuasion rate of up to 26%. These findings reinforce concerns about the media’s role in sowing distrust in scientific evidence in the determination of public policies.  

Willem Buiter, 03 July 2020

The US Federal Reserve – the world’s most important central bank – is not in a good place. This column outlines three flaws in the operating practices of the Fed – (i) its refusal to adopt negative policy rates, (ii) the build-up of significant credit risks through non-transparent (quasi-)fiscal actions, and (iii) stress testing analysis which fails to account for the severity of the COVID-19 crisis. It proposes a number of ways forward, including a symmetric policy rate around zero, a temporary ban on dividend payments, new equity issuance, and conducting a comprehensive stress test of the financial system.

Luan Borelli, Geraldo Goes, 01 July 2020

Brazil has faced great difficulties in controlling the COVID-19 epidemic, having become the world’s epicentre of the coronavirus pandemic and recently reaching 50,000 fatalities. This column argues that the great heterogeneities between states in Brazil, together with difficulties in political coordination, may have shaped these consequences. Looking at five states, it investigates whether certain differences in the states’ intrinsic characteristics may have influenced the dynamics of the local epidemic. Governments may need to consider local conditions and adopt heterogeneous containment policies.

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