Jean-Paul Renne, Guillaume Roussellet, Gustavo Schwenkler, 26 November 2020

Could restrictions at the federal level have slowed the spread of COVID-19 in the US? This column addresses this question using a novel, multi-region epidemiological model that calculates the number of deaths that would have resulted from the federal government mirroring the policies of those states with the earliest and most rigorous restrictions. It finds that by late September 2020, more than two-thirds of the country’s COVID-19 deaths could have been prevented,highlighting the need for unified action from state and federal regulators.

Maja Adena, Ruben Enikolopov, Maria Petrova, Hans-Joachim Voth, 19 November 2020

In conflicts, adversaries aim for victory by using both direct and indirect forces to break the enemy’s will to resist. During WWII, Allied forces used strategic bombing and radio propaganda to undermine German morale. This column compares German domestic resistance to the Nazi regime, based on treason trial records, with the monthly volume of bombing and the locations of BBC radio transmitters. Where radio reception was better and Allied air forces bombed more heavily, German domestic resistance was markedly more likely, despite the draconian punishments for even the mildest transgressions.

Gordon Betcherman, Mauro Testaverde, 18 November 2020

The Covid-19 crisis has profoundly affected employment everywhere, but countries have adopted different strategies to try to mitigate the worst of the effects. This column compares the Greek experience to the rest of Europe, as well as to North America. The authors conclude that given the nature of the pandemic, models for managing labour market shocks will need to offer extended support where the shock persists or reoccurs. Crucially, successful policy approaches will need to be well suited for enabling job creation once conditions are in place for a restart.

Antoine Bozio, Bertrand Garbinti, Jonathan Goupille-Lebret, Malka Guillot, Thomas Piketty, 18 November 2020

How much can redistribution policies account for long-run changes in inequality? This column reveals that the reduction of inequality implied by redistribution is significant in France and the US and increased throughout the entire 20th century, but pre-tax income inequality appears to be the main factor accounting for the differential levels and trends in the two countries. These findings suggest that policy discussions on inequality should pay more attention to policies affecting pre-tax inequality and should not focus exclusively on redistribution.

Monica Deza, Catherine Maclean, Keisha Solomon, 14 November 2020

The correlation between mental illness and crime has been widely documented. In general, individuals with poor mental health are more likely to be involved with crime, either as an offender or as a victim, compared to other individuals. This column presents evidence from the US, arguing that policies that grant support to mental healthcare may have long-term positive effects on crime rates. Since crime is a complex outcome, a flexible and varied policy response is essential to tackling the issue.

Egle Jakucionyte, Swapnil Singh, 09 November 2020

Mortgage markets are dynamic in nature, which sometimes comes at a cost. This column shows that over the last few decades, the US mortgage market experienced a secular decline in co-borrowers. Having a co-borrower minimises the exposure and effects of adverse income shocks and thus should enhance mortgage performance. The authors show that this yet unexplored decline in co-borrowers therefore has non-trivial implications for the financial stability of the mortgage market and regional economic outcomes. 

Helios Herrera, Max Konradt, Guillermo Ordoñez, Christoph Trebesch, 06 November 2020

The Covid-19 pandemic has had major political consequences. The balancing act of curbing the spread of the virus and re-opening the economy has been a particularly high-profile challenge for policymakers in recent months. This column explore the political costs of (mis-)managing the pandemic. The findings suggest that governments are punished in terms of political approval when Covid-19 infections accelerate, particularly in the absence of effective lockdown measures. Economic indicators, in contrast, do not appear to be strong predictor of political approval rates during this crisis. 

Mark Schankerman, Florian Schuett, 06 November 2020

In the last years, there has been substantial pushback against the patent system. Critics claim that patent rights are becoming an impediment to innovation, and an instrument to extract rents through patent litigation. This column develops a framework to quantitatively assess the effectiveness of the current US patent system and the welfare impact of reforms. It finds that the current system generates positive social value, and that the recent introduction of the Patent Trial and Appeal Board increased welfare. Intensifying patent office examination and imposing antitrust limits on patent licensing agreements would yield additional welfare gains.

Johannes Kunz, Carol Propper, 05 November 2020

The COVID-19 pandemic has spread quickly and extensively around the globe and left behind many fatalities. This column reports on research which examines the association between county-level death rates and the quality of hospital care residents of those counties had access to in the first five months of the pandemic in the US. It finds that death rates were lower in counties where quality of hospital care, particularly for respiratory disease, was higher. But counties with high shares of minority populations did not appear to benefit from higher hospital quality.

Alex Rees-Jones, John D'Attoma, Amedeo Piolatto, Luca Salvadori, 04 November 2020

While few groups have weathered the Covid-19 crisis unscathed, recent evidence suggests that the damage has been especially extreme among the economically vulnerable. This column evaluates changing attitudes towards welfare spending as a result of the pandemic. The findings suggest that people living in areas most severely hit by the crisis are increasingly supportive of long-term reforms to the welfare system. Despite having access to relatively widespread welfare spending, European citizens are dissatisfied with the safety net systems currently in place. 

Jesse Bruhn, Scott A. Imberman, Marcus A. Winters, 01 November 2020

Charter schools in the US – publicly funded but independently operated schools of choice – are often criticised for competing with and harming the quality of surrounding traditional public schools. This column examines Massachusetts’s expansive and effective charter-school sector for the relationship between teacher quality and mobility. Charter schools retain fewer teachers compared to traditional public schools and the best teachers often move to the traditional public-school system. Charter schools may benefit traditional public schools by providing an alternative pathway for unlicensed teachers to enter the labour force and sorting those who are successful in to traditional public schools. 

Mark Colas, Sebastian Findeisen, Dominik Sachs, 31 October 2020

Need-based financial aid helps underprivileged students in the US attend university. This column combines theoretical and empirical analyses to determine the optimal level of that aid and finds that current aid packages in the US are significantly less need-based than they should be. Not only does need-based financial aid help to reduce inequality, it is also an investment in future tax revenue, making it an optimal subsidy from an efficiency standpoint. In this case, equity and efficiency go hand in hand.

Ozlem Akin, Christian Fons-Rosen, José-Luis Peydró, 29 October 2020

There are widespread concerns about potentially excessive connections between the financial sector and political institutions. Less is known about the intensity of information flows between the public and private sector. This column examines insider trading surrounding the largest bank bailout in history, the 2008 US Troubled Asset Relief Program. In politically connected banks, insider buying during the pre-TARP period is associated with increases in abnormal returns around bank-specific TARP announcements. Information transmission seems to be a third pillar of the mutually beneficial relationship between finance and politics, possibly allowing bankers to use their political connections for personal gain.

Alexander Chudik, Kamiar Mohaddes, M. Hashem Pesaran, Mehdi Raissi, Alessandro Rebucci, 19 October 2020

The Covid-19 pandemic is unprecedented in its global reach and impact, posing formidable challenges to policymakers and to the empirical analysis of its direct and indirect effects within the interconnected global economy. This column uses a ‘threshold-augmented multi-country econometric model’ to help quantify the impact of the Covid-19 shock along several dimensions. The results of the analysis show that the global recession will be long lasting, with no country escaping its impact regardless of their mitigation strategy. These findings call for a coordinated multi-country policy response to the pandemic.

Marit Hinnosaar, Elaine Liu, 18 October 2020

Alcohol is one of the leading killers among substances, but little is known how various factors interact to affect individual alcohol consumption. This column explores how much the environment –, including supply conditions, alcohol regulation, taxes, and peers – drives alcohol consumption, by analysing changes in alcohol purchases when US consumers move from one state to another. The current environment explains about two-thirds of the differences in alcohol purchases, with consumers’ alcohol purchases converging sharply toward the average purchase level in their destination state right after moving.

Emine Boz, Camila Casas, Georgios Georgiadis, Gita Gopinath, Helena Le Mezo , Arnaud Mehl, Tra Nguyen, 09 October 2020

Most global trade transactions are invoiced in just a few currencies, regardless of the countries involved in the transaction. This column presents a new dataset that offers a comprehensive and up-to-date understanding of trade invoicing patterns within the major currencies. It finds that vehicle currency use has been on the rise, with dollar invoicing increasing over time despite the decline in the share of global trade accounted for by the US, and euro invoicing also rising among certain countries (typically at the expense of the dollar). 

Ricardo Caballero, Alp Simsek, 05 October 2020

While the Fed’s massive policy response to the Covid-19 shock was successful in reversing the financial meltdown, it did not prevent a dramatic collapse in the real economy. This column argues that the patterns observed are consistent with optimal monetary policy once the subtleties of the relationship between monetary policy, the stock market, and the economy are considered.

Gerdien Meijerink, Bram Hendriks, Peter A.G. van Bergeijk, 02 October 2020

The outbreak of the Covid-19 pandemic led to a 14% dive in world trade by April 2020. Using the CPB’s World Trade Monitor and a Bayesian VAR model, this column compares the recent contraction, and partial recovery, to the 2008/2009 Global Crisis and the Great Depression. The current trade recession appears to have a sharper ‘V-shape’, with a stronger collapse but a quicker recovery than the previous crises.

Gordon Liao, Tony Zhang, 01 October 2020

Institutional investors and borrowers often hedge a sizeable portion of their currency mismatches. This column examines the role that this currency hedging of foreign assets and liabilities plays in determining exchange rates. It shows that countries’ hedging demands from their external imbalances can explain forward and spot exchange rate dynamics during the COVID-induced financial turmoil in March 2020, as well as their usage of the Federal Reserve central bank liquidity swap lines.

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