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.

Aida Caldera, Alain de Serres, Filippo Gori, Oliver Röhn, 28 March 2017

Severe recessions have been frequent among OECD countries over the past four decades. This column explores the implications of various broad types of policy to minimise the risk and frequency of such episodes for the trade-off for the growth-fragility nexus. Product and labour market policies improve growth but are essentially neutral with regards to economic risks, while better quality institutions increase both growth and economic stability. Macroprudential and financial market policies, on the other hand, entail a trade-off between growth and risk.

Tessa Bold, Tobias Broer, 16 February 2017

The substantial literature examining risk-sharing practices in rural villages in developing countries has typically taken the social institutions in these communities as given. Using data from India, this column challenges this assumption by showing how the costs and benefits of risk-sharing arrangements can shape these social institutions. The results suggest that the size and nature of these risk-sharing groups may evolve over time as their environment changes. Public policy to reduce consumption fluctuations can be counterproductive in the standard model because of a strong crowding-out effect.

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