Annie Tubadji, Don Webber, Frederic Boy, 08 May 2020

The COVID-19 pandemic is a deadly threat to human life on our planet. This column uses a spatial analytical approach to show that the pandemic has disproportionately affected the economically and socially vulnerable places across the UK along the lines of existing economic and cultural divides. The pandemic is likely to exacerbate existing real and perceived deprivation on the brink of an expected economic shock at the end of the Brexit implementation period. If health deprivation is compounded by Brexit-related economic blows, greater protests are likely to be the result.

Alexander Bick, Adam Blandin, 06 May 2020

As this column is published, the most recent government labour market statistics for the US refer to the week of 8-14 March, and so do not yet reflect the impact of the Covid-19 outbreak. This column uses a series of real-time labour market surveys of US households to document labour market outcomes more rapidly and more often than traditional government surveys. The estimates point to unprecedented devastation in the US labour market. New surveys will be run throughout the summer.

Erica Bosio, Simeon Djankov, 06 May 2020

With lockdown measures in place almost worldwide now, cash-flow represents a significant concern for firms across multiple sectors. It remains to be seen exactly which types of business will be able to weather the coming storm. This column estimates the survival time of nearly 7,000 firms in a dozen Southern European and emerging market economies. Under the assumptions that firms have no incoming revenues, the median survival time across industries ranges from 8 to 19 weeks. Once collapsed export demand is taken into account, the median survival time falls to between 8 and 14 weeks.

Matthew Cleevely, Daniel Susskind, David Vines, Louis Vines, Samuel Wills, 06 May 2020

Relaxing the lockdowns imposed to control the Covid-19 pandemic requires a workable testing strategy for the population. This column argues that ‘stratified periodic testing’ can help economies return to work while keeping Covid-19 cases falling. This strategy would involve testing individuals within specified at-risk groups for infection at regular intervals, upwards of once every five days. This would be a better use of scarce testing resources than daily ‘universal random testing’ of the entire population.

Dimitris K. Chronopoulos, Marcel Lukas, John O.S. Wilson, 06 May 2020

Since the first COVID-19 cases were reported in January 2020, the UK government has introduced successive public health measures, culminating in late March 2020 with enforced closures of non-essential businesses and social distancing. These measures are significantly affecting UK household incomes and expenditures. This column exploits a large anonymised transaction-level dataset covering Great Britain to examine real-time consumer spending responses to the COVID-19 pandemic and related public policy measures. While there are differences by age, gender, and income level, overall consumer spending declined as the government lockdown becames imminent and has continued to decline since.

Douglas Irwin, 05 May 2020

The COVID-19 pandemic has led policymakers and business leaders to question whether global supply chains have been stretched too far. This column argues that the pandemic simply adds further momentum to the deglobalisation trend. The fourth era of globalisation appears to have peaked in 2008, and since then we have been in an era of ‘slowbalisation’.

Jordan Schoenfeld, 05 May 2020

Are pandemics systemically important to modern-day financial markets? It is not obvious how a financial market’s myriad interconnected parts would react to a pandemic-induced supply and demand shock. This column shows that the COVID-19 pandemic triggered unprecedented changes in employment levels and the values of stocks, bonds, commodities, and currencies. Corporate managers also systematically underestimated their business-model exposure to pandemics in their annual report risk factors.

Nicholas Bloom, Fatih Guvenen, Sergio Salgado, 05 May 2020

During recessions, some firms and industries get hit far harder than others. This column argues that the current COVID-19 crisis is no exception. While most firms have experienced a negative demand shock, firms in the entertainment, services, and manufacturing sector have experienced a dramatic decline in sales that is likely to persist over several months. The increase in the probability of firm-level disasters or, more precisely, the decrease in the skewness of the distribution of firms’ shocks, will play a significant role in the response of aggregate output and employment. 

Alexia Delfino, Raffaella Sadun, 04 May 2020

As businesses emerge from lockdown, they will face the challenge of adopting new health and safety standards while maintaining profitability and productivity. Effective management will be crucial in aligning these private and social interests. This column explores how structured management training programmes – modelled after support given to European firms under the Marshall Plan – can help firms operate safely and productively in the Covid-19 era. It outlines several principles policymakers should follow in the design and implementation of these training programmes.

Simon Evenett, L Alan Winters, 04 May 2020

The world trading system has faced policy disruptions as nations have scrambled to find the necessary medical supplies to deal with the Covid-19 pandemic. This column suggests that in return for importing governments agreeing to keep their import restrictions at their current low levels, exporting governments agree to qualify the extent to which they can restrict shipments abroad. It presents a straightforward, WTO-consistent, time-limited proposal that countries can publicly commit to at any time.

Miltos Makris, 04 May 2020

Social distancing fits well in the economist’s analytical framework. This column discusses how epidemiological models can be enriched with individual social distancing decisions. Preliminary simulations show how an epidemic could be influenced by the interaction of private decisions and government measures on social distancing. The simulations highlight the importance of including economic insights in epidemiological simulations, rather than serving as forecasts.

Zachary Bethune, Anton Korinek, 03 May 2020

At the centre of the debate on how to deal with the novel coronavirus is whether to aim for containment or herd immunity. A crucial factor in this decision is whether we are guided by individually optimising behaviour or by overall societal welfare, since COVID-19 gives rise to substantial externalities. This column calculates that while individuals perceive the cost of becoming infected to be $80,000 the true social cost is more than three times higher, and argues that public health authorities should use mandatory measures to account for these externalities. To ameliorate the costs of the trade-off, it is crucial to develop sufficient testing and tracing capacity so that untargeted lockdowns and the economic cost involved can be ended. 

Alexander Chudik, M. Hashem Pesaran, Alessandro Rebucci, 02 May 2020

China responded to the Covid-19 outbreak with draconian mandatory social distancing policies. Other countries have reacted more timidly, either by deliberate choice, as in the United States, or due to implementation constraints, as in some European countries, leaving individuals to choose for themselves an appropriate degree of self-isolation. This column, we argue that differences in mandated social distancing policies across countries have contributed to astonishingly different outcomes.

Gabriella Conti, 01 May 2020

While the COVID-19 pandemic has global reach, it is not affecting everyone equally. This column focuses on the first years of life and notes how the pandemic is likely to have more adverse effects for vulnerable parents and children. Given that early experiences can have an enduring impact on long-term health and socioeconomic outcomes, it argues that sustaining early childhood interventions is critical to avoid the worsening of inequalities in human development.

Nicolas Ajzenman, Tiago Cavalcanti, Daniel Da Mata, 02 May 2020

Regardless of their scientific soundness, COVID-19 recommendations from political leaders such as President Trump are taken seriously by followers. In Brazil, President Bolsonaro has publicly flaunted social distancing measures and downplayed the seriousness of the disease in at least two well-publicised instances. This column analyses the effects of Bolsonaro’s actions and speeches in the month of March on Brazilians’ social-distancing behaviours, using electoral data and geo-localised mobile phone data from 60 million devices. The findings suggest that social distancing behaviour decreased in municipalities with stronger support for Bolsonaro.

Anna Stellinger, Henrik Isakson, Ingrid Berglund, 01 May 2020

The world is in the midst of a dual crisis, threatening both the health of millions of people and the world economy. The crisis also touches upon various aspects of trade policy. Once the immediate crisis has abated it is not unlikely that the major trade debate will be about reshoring production. The argument goes that it is dangerous – both from an economic point of view and from a public health perspective – to be so dependent on imports. This column argues that the opposite is in fact true.

Ilan Noy, Nguyen Doan, Benno Ferrarini, Donghyun Park, 01 May 2020

The economic risk of an epidemic is distinct from its health risk. In the case of COVID-19, financial and institutional capacity are key determinants of an economy’s resilience to the shock. This column assesses the economic risks associated with the coronavirus pandemic across the world. The evidence shows that economic risks are especially high in Africa, Iran, South and Southeast Asia. Although healthcare systems are better equipped to handle the crisis than in previous pandemics, the globalisation of trade and labour flows will likely amplify the risks to the global economy.

Bary Pradelski, Miquel Oliu-Barton, 09 February 2021

EU member states agreed to adopt a joint strategy to exit Covid-19, based on setting public health measures and travel restrictions dependent on a region’s epidemiological situation. The strategy follows three of the four key principles of green zoning as introduced in the original version of this column, published in April and circulated to European decision makers: (1) divide each country into smaller zones; (2) label zones green if the virus is under control, and red otherwise; (3) adopt colour-dependent public health measures. However, the strategy falls short on the last and critical principle: (4) allow free travel between green zones, but control other travel. This update argues that the unconditional protection of green zones through travel restrictions must become the EU’s focus to curb the spread of the virus, avoid the repeated lockdowns experienced over the past year, and minimise economic and social damage.

ChaeWon Baek, Peter B. McCrory, Todd Messer, Preston Mui, 30 April 2020

Stay-at-home orders have been imposed in many countries to flatten the COVID-19 pandemic curve, but it’s not clear how much economic disruption is caused directly by the orders and how much by the coronavirus. This column disentangles the two by comparing the implementation of stay-at-home policies across the US and high-frequency unemployment insurance claims. The direct effect of stay-at-home orders accounted for a significant but minority share of the overall rise in unemployment claims; unemployment would have risen even without such orders. So long as the underlying public health crisis persists, undoing stay-at-home orders will only bring limited economic relief.

Massimo Motta, Martin Peitz, 30 April 2020

The European Commission has been asked to develop a proposal for a new recovery fund of more than €1 trillion. Given the substantial support needed by most sectors in the present circumstances, it is crucial to identify the ones which are most important to proper functioning of the EU economies. Based on the principle of subsidiarity, this column formulates two general criteria to identify these sectors: those for which (i) the volume of cross-border trade within the EU is large, or (ii) externalities across member states are important. Support schemes should be oriented towards the future and not try to preserve the status quo ante.



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