Free DP Download 25 February 2022 - The Case for a Positive Euro Area Inflation Target

Friday, February 25, 2022

Klaus Adam, Erwan Gautier, Sergio Santoro, Henning Weber CEPR Discussion Paper No. 16828 | December 2021

This paper estimates the impact of technology sophistication pre-COVID-19 on the performance of firms during the early stages of the pandemic. We exploit unique data covering firms from Brazil, Senegal, and Vietnam using a treatment effect mediation framework to decompose the results into a direct and an indirect effect. Increasing pre-pandemic technology sophistication by one standard deviation is associated with 3.8pp higher sales. Both effects are positive, but the direct effect is about 5 times larger than the indirect effect. The total effect on sales is markedly nonlinear with significantly smaller estimates of the reduction in sales for firms with more sophisticated pre-pandemic technology. Our results are robust to different measures of digital responses and matching estimators.

You can now listen to a podcast where Klaus Adam tells Tim Phillips about this research.