Francesco Bianchi, Renato Faccini, Leonardo Melosi, 13 May 2020

Fighting the consequences of the COVID-19 pandemic poses a difficult task for fiscal and monetary authorities alike. The current low interest rate environment limits the tools of central banks while the record high debt levels curtail the efficacy of fiscal interventions. This column proposes a coordinated policy strategy aiming at creating a controlled rise of inflation and an increase in fiscal space in response to the COVID-19 shock. The strategy consists of the fiscal authority introducing an emergency budget while the monetary authority tolerates an increase in inflation to accommodate this emergency budget.

Sophia Chen, Deniz Igan, Nicola Pierri, Andrea Presbitero, 11 May 2020

The COVID-19 pandemic and the associated lockdowns have led to unprecedented economic costs around the world. Using high-frequency indicators, this column shows that while COVID-19 is a global shock, European countries and US states with larger outbreaks have suffered significantly larger economic losses. The impact of COVID-19 is mostly captured by changes in people’s observed mobility whereas, so far, there is no robust evidence supporting additional impact from the adoption of non-pharmaceutical interventions, especially in the US. The results indicate a crucial role for communication and trust-building.

Marcus Painter, Tian Qiu, 11 May 2020

Social distancing is vital to mitigate the spread of the novel coronavirus. Leveraging smartphone geolocation data, this column examines how political beliefs impact the effectiveness of state-level social distancing orders in the US. The findings suggest that Republicans and misaligned Democrats are less likely to adhere to social distancing orders. Bipartisan support for social distancing measures thus appears to be a key factor in how quickly we can mitigate the spread of the novel coronavirus.

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.

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. 

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.

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.

Ricardo Caballero, Alp Simsek, 30 April 2020

The Covid-19 shock has caused large turmoil on financial markets. This column argues that non-financial supply shocks such as the current one can endogenously lead to financial shocks and severe contractions in asset valuations and aggregate demand, which substantially amplify a recession. Conventional monetary policy can mitigate the downward pressure as long as the interest rate is unconstrained. If it is, large-scale asset purchases by government facilities are needed to prevent a downward spiral.

Efraim Benmelech, Carola Frydman, 29 April 2020

The immediate economic fallout for the US economy from the coronavirus pandemic is predicted to be disastrous. In comparison, while the Spanish flu also had some economic consequences, they were mostly modest and temporary. This column evaluates the developments in the US economy during the 1918 influenza, in search of a possible explanation for the limited adverse effects of the flu despite similar social distancing requirements, albeit at a lower scale. It concludes that a large expansion in government demand can go a long way in softening the economic impact of the crisis we face today. 

Laura Kodres, 28 April 2020

Amid the uncertainty of the COVID-19 pandemic, the movements in equity markets’ around the world have mirrored the spread of the virus and its virulence. Attempts to limit market crashes, volatility, and financial contagion have taken a number of different forms. This column explores the two main policy responses available to financial market regulators – bans on short sales versus circuit breakers – and reviews them in the context of some ‘best practices’ for market regulation.

Petr Sedláček, Vincent Sterk, 25 April 2020

Startups are being hit hard by the COVID-19 pandemic and the lockdown. Introducing a ‘startup calculator’ that allows anyone to compute the aggregate employment losses under various economic scenarios, this column explores the effects of a decline in startup activity on aggregate employment. Job losses may be large and may last well beyond the pandemic itself.

Christian Bayer, Benjamin Born, Ralph Luetticke, Gernot Müller, 24 April 2020

Among the various measures announced in response to the economic fallout caused by the COVID-19 pandemic, the $2 trillion stimulus package legislated in the US at the end of March 2020 stands out in terms of size. This column quantifies the multiplier of the stimulus’s transfer component. It finds that transfers which top up unemployment benefits are particularly effective because they reduce the income risk due to the lockdown ex ante. In this case, the multiplier may be as high as 2.

James Bullard, 16 May 2020

In the US around 1,600 firms go out of business in a normal day. James Bullard, Federal Reserve Bank of St. Louis, thinks there is little chance of businesses that were about to go under before the pandemic being shored up by the measures being taken to protect the US economy. His view is that whatever economy we had on February 1st, we want that economy on the other side of the pandemic

James Bullard, 16 April 2020

The actions and policies taken to control the spread of COVID-19 in the US have had the effect of engineering a controlled, partial and temporary shutdown of certain sectors of the economy. James Bullard, Federal Reserve Bank of St. Louis, tells Tim Phillips about the implications of theses radical changes to the management of the US economy in the near term.

Olivier Coibion, Yuriy Gorodnichenko, Michael Weber, 14 April 2020

The Covid-19 crisis in the US and the policy responses have led to unprecedented numbers of initial claims for unemployment, but there are concerns that total job losses are being understated. This column uses a repeated large-scale survey of households in the Nielsen Homescan panel to show that job loss has been significantly greater than implied by new unemployment claims, with an estimated 20 million jobs lost by 8 April – far more than were lost over the entire Great Recession. Many of those who have lost their jobs are not actively looking to find new ones.

Pascal Michaillat, Emmanuel Saez, 12 April 2020

A lower unemployment rate puts more people into work, but it also makes it harder for businesses to fill their vacancies. This column explores the trade-off between unemployment and vacancies, as captured by the Beveridge curve – a measure which can then be used to estimate the socially efficient unemployment rate for the wider economy. The analysis suggests that the US unemployment rate of 3.5% just before the coronavirus crisis was just about efficient. 

B. Ravikumar, Guillaume Vandenbroucke, 17 April 2020

This column uses the actual number of COVID-19-related deaths to calculate projections for the US based on other countries’ experiences.

Hamish Low, Luigi Pistaferri, 08 April 2020

Disability insurance programmes provide income replacement and medical benefits to workers who face major health shocks impeding their ability to work. The screening error of incorrect acceptance – where individuals who are not disabled are awarded benefits – and moral hazard have been well researched, but scant attention has been paid to incorrect rejection. Using US data, this column shows that the probability of being rejected when disabled varies with a host of observable characteristics. Most strikingly, truly disabled women are 20 percentage points more likely to be incorrectly rejected than observationally equivalent men.

James Bullard, 04 April 2020

The actions and policies taken to control the spread of COVID-19 in the US have had the effect of engineering a controlled, partial and temporary shutdown of certain sectors of the economy. This column argues that this organised ‘throttling down’ radically changes the way we need to think about and gauge the health of the US economy in the near term. The goals of macroeconomic policy will need to be very different, in some ways the opposite of what we would normally try to accomplish.

Marijn Bolhuis, Judd N. L. Cramer, 02 April 2020

The effects of the COVID-19 pandemic on public health will have major repercussions for the global economy, impacting trends in many different sectors. This column uses detailed neighbourhood-level data to evaluate the impact of demographic changes on different segments of the US housing market. As larger homes (and those in neighbourhoods with relatively more baby boomers) lag behind the broader market in terms of price growth, they also appear increasingly difficult to sell. In the wake of COVID-19, a large share of the US population is at risk of taking a substantial hit to their asset portfolio, just as they retire.



CEPR Policy Research