Yoseph Getachew, 22 September 2020

During the COVID-19 pandemic, policymakers have often relied on epidemiology models to track the spread of the outbreak. However, such models lack the necessary tools to account for individual behaviour potentially influencing the dynamics of the pandemic. This column integrates individual economic decision-making and voluntary social distancing into these models. It argues that voluntary social distancing is important for both flattening the infection curve and minimising economic damage. Although government-enforced social distancing is much more effective in flattening the curve, it comes at a higher cost to the economy.

Òscar Jordà, Moritz Schularick, Alan M. Taylor, 01 September 2015

The risk that asset price bubbles pose for financial stability is still not clear. Drawing on 140 years of data, this column argues that leverage is the critical determinant of crisis damage. When fuelled by credit booms, asset price bubbles are associated with high financial crisis risk; upon collapse, they coincide with weaker growth and slower recoveries. Highly leveraged housing bubbles are the worst case of all.

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