Marco Pagano, Christian Wagner, Josef Zechner, 11 June 2020

Whether COVID-19 will trigger a massive reallocation of capital and labour is a key question for policymakers and investors alike. This column shows that asset markets reveal large cross-sectional differences in the repricing of industries before, during, and after the onset of COVID-19. Firms that are more resilient to social distancing significantly outperformed in the six years before and during the COVID-19 outbreak. Looking into the future, stock options imply that investors require significantly lower returns from more pandemic-resilient firms. Governments would be unwise to ignore these signals, directing public financial resources mainly to prop up ailing low-resilience firms.

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.

Lucia Alessi, Peter Benczur, Francesca Campolongo, Jessica Cariboni, Anna Rita Manca, Balint Menyhert, Andrea Pagano, 26 September 2018

Over recent decades, scholars and policymakers have been exploring how to make economies more resilient to potential shocks. This column investigates which EU members showed resilience during the Global Crisis and attempts to identify characteristics associated with resilience. The results reveal a lot of heterogeneity amongst countries, and those that are more resilient in the short run are not necessarily those with superior recoveries down the line. Further analyses show that social expenditures, political stability, and competitive wages are important for impact, medium-run, and ‘bounce forward’ resilience, respectively. 

Tolga Aksoy, Paolo Manasse, 23 March 2018

After 2008, labour markets in the euro area responded differently to the recessions and subsequent labour market reforms. This column uses data from 19 countries to show that labour and product market reforms speeded up the recovery from recession, but also reduced the resilience of employment to shocks. Because the resilience effect occurs first, deep reforms risk losing public support.

Kristian Behrens, Brahim Boualam, Julien Martin, 03 January 2018

Policymakers strive to encourage resilience among firms. We often assume that industry clustering creates resistance to shocks. This column uses the evidence from Chinese imports in the Canadian textile industry to show that firms in clusters were in fact no more resilient to the ‘China shock’.

Luis Brandao-Marques, Gaston Gelos, 18 January 2016

Concerns about both the level of bond market liquidity and its fragility have risen lately, prompted partly by events such as the October 2014 Treasury bond flash rally in the US, or the April 2015 Bund tantrum in Europe. This column assesses current market liquidity and resilience, discerning several key policy recommendations from the evidence.


CEPR Policy Research