We use high-frequency indicators to analyze the economic impact of COVID-19 in Europe and the United States during the early phase of the pandemic. We document that European countries and U.S. states that experienced larger outbreaks also suffered larger economic losses. We also find that the heterogeneous impact of COVID-19 is mostly captured by observed changes in peopleâ€™s mobility, while, so far, there is no robust evidence supporting additional impact from the adoption of non-pharmaceutical interventions. The deterioration of economic conditions preceded the introduction of these policies and a gradual recovery also started before formal reopening, highlighting the importance of voluntary social distancing, communication, and trust-building measures.
Chen, S, D Igan, N Pierri and A Presbitero (2020), ‘Tracking the Economic Impact of COVID-19 and Mitigation Policies in Europe and the United States‘, COVID Economics 36, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-36#392514_392912_390555
COVID-19 hit firms by surprise. In a high frequency, representative panel of German firms, the business outlook declined and business uncertainty increased only when the spread of the COVID-19 pandemic led to domestic policy changes: The announcement of nation-wide school closures on March 13 caused by far the largest change in business perceptions. In contrast, business perceptions hardly reacted to any other potential source of information: Firms did not learn from foreign policy measures, even if they relied on inputs from China or Italy. The local, county-level spread of COVID-19 cases affected expectations and uncertainty, albeit to a much lesser extent than the domestic policy changes.
Buchheim, L, C Krolage and S Link (2020), ‘Sudden Stop: When Did Firms Anticipate the Potential Consequences of COVID-19?‘, COVID Economics 36, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-36#392514_392912_390556
Fear and imposed isolation worldwide due to the outbreak of the coronavirus disease (COVID-19) have raised alarms about its impact on mental health on a global scale. Associated with the respiratory disease and the public health threat, confinement, isolation, and social distance were presented as the only effective measures to prevent the spread of the virus. For those who already have psychological disorders, it is one additional factor of distress and tension. For those who do not have them, this is, in the overwhelming majority, a whole new situation and a possible cause of anxiety, stress, and depression. Besides, the severe anticipated global recession, following the lockdown of economies resulting from the virus containment strategies, should lead to substantial increases in unemployment rates and indebtedness levels, which are both risk factors for suicide. History has shown us that previous pandemics and recessions harmed population mental health, having a negative impact, namely in suicidal behaviors. The present literature review intends to alert to the prevention of suicide amid the COVID-19 pandemic, based on past similar scenarios of epidemics, such as the Spanish flu and SARS, and recessions, namely the Great Recession, the Asian economic crisis (1997-1998) and the Russian economic crisis (early 1990s). A positive sign was the fact that at the end of March, several organizations and entities worldwide, namely in Portugal, had (already) made available resources to tackle population stress and avoid negative impacts on mental health. Moreover, specialized publications had warned about the possible effects of COVID-19 on suicidal behaviors. Two months after, the subject was still active and alive on the Web. The literature also shows that the recipe to mitigate depressions and suicide behaviors in times of pandemics and recessions seems to be known: investment in mental healthcare, namely suicide prevention services, and in active employment policies.
Ribeiro, E (2020), ‘COVID-19: Pandemics, recessions, and suicide - Lessons from the past and points to the future‘, COVID Economics 36, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-36#392514_392912_390818
In order to get the COVID-19 pandemic under control, most governments around the globe have adopted some sort of containment policies. In the light of the enormous costs of these policies, in many countries highly controversial discussions on the adequacy of the chosen policies evolved. We contribute to this discussion by evaluating three waves of containment measures adopted by the German government. Based on a spatio-temporal endemic-epidemic model we show that in retrospective, only the first wave of containment measures clearly contributed to flattening the curve of new infections. However, a real-time analysis using the same empirical model reveals that based on the then available information, the adoption of additional containment measures was warranted. Moreover, our spatio-temporal analysis shows that a one-size-fits-all policy, as it was adopted in Germany on the early stages of the epidemic, is not optimal.
Berlemann, M and E Haustein (2020), ‘Right and yet wrong: A spatio-temporal evaluation of Germany's COVID-19 containment policy‘, COVID Economics 36, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-36#392514_392912_390819
A renewed interest in the ability to work remotely has arisen due to COVID-19. This paper seeks to understand the technological antecedents of that ability. We construct county-level measures of the ability to work at home (wah) using industry and occupation data from a variety of sources, and correlate these with county-level measures of automation and new-task implementation. Empirical results suggest that regions that faced automation produced job opportunities with lower wah, while regions that faced new innovation demonstrate no clear pattern. Finally we show that regions with low wah tend to employ lower-skilled immigrant populations, and have su?ered higher unemployment due to COVID. Even as many technologies increase the ability of workers to work remotely, automating technologies tend to counter this, raising the potential for the need to shutdown certain industrial centers due to the COVID pandemic.
Rahman, A (2020), ‘Why Can't Everybody Work Remotely? Blame the Robots.‘, COVID Economics 36, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-36#392514_392912_390557
We use monthly credit card data from the Federal Reserve's Y-14M reports to study the early impact of the COVID-19 shock on the use and availability of consumer credit. First, we find that in counties severely affected by the pandemic, creditworthy borrowers reduce their credit card balances and credit card transactions, while the least creditworthy borrowers increase their outstanding balances. Second, while both local pandemic severity and non-pharmaceutical interventions (NPIs) have a significantly negative effect on credit use, the pandemic itself is the main driver. Third, we report a drastic reduction in credit card originations, which is more pronounced in counties affected by pandemic severity and in counties with more stringent NPIs. Finally, we find a reduction in the credit limits and an increase in the APR spreads of newly issued credit cards to the riskiest borrowers, which is consistent with a â€œflight-to-safetyâ€ response of banks to the COVID-19 shock.
Horvath, A, B Kay and C Wix (2020), ‘The COVID-19 Shock and Consumer Credit: Evidence from Credit Card Data‘, COVID Economics 36, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-36#392514_392912_390558