We argue that the COVID-19 foreclosure moratorium plays a crucial role in supporting refinancing activities, in addition to preventing foreclosures. We estimate that the moratorium prevented approximately 900,000 foreclosures filings and house price drops up to 9% from April to October 2020. Using loan-level data on GSE-backed mortgages, we find that the moratorium decreases the refinancing cost of households and relaxes their refinancing eligibility constraints.Â Our results imply that granting forbearance to households facing foreclosures has positive externalities on a broader range of households who intend to refinance. Mortgage forbearance can thus amplify the stimulative effect of monetary policy.
Capponi, A, R Jia and D Rios (2021), ‘The Effects of Mortgage Forbearance on Refinancing: Evidence from the COVID-19 Period‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390719
Epidemics may have social scarring effects, increasing the likelihood of social unrest. They may also have mitigating effect, suppressing unrest by dissuading social activities. Using a new monthly panel on social unrest in 130 countries, we find a positive cross-sectional relationship between social unrest and epidemics. But the relationship reverses in the short run, implying that the mitigating effect dominates in the short run. Recent trends in social unrest immediately before and after the COVID-19 outbreak are consistent with this historic evidence. It is reasonable to expect that, as the pandemic fades, unrest may reemerge in locations where it previously existed.
Barrett, P and S Chen (2021), ‘Social Repercussions of Pandemics‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390720
School closures, forcibly brought about by the COVID-19 crisis in many countries, have impacted childrenâ€™s lives and their learning processes. There will likely be substantial and persistent disparities between families in terms of educational outcomes. Distance learning solutions adopted by schools have been heterogeneous across countries, within countries and between school levels. As a consequence, most of the burden of childrenâ€™s learning has fallen on their parents, with likely uneven results depending on the socio-economic characteristics of the family. Using a real time survey data, collected in April and early May 2020 in France and Italy, we estimate child fixed effects models to analyze how the lockdown has affected parentsâ€™ evaluations of their childrenâ€™s emotional wellbeing and of their home learning process. The analysis also focuses on the role played by online classes, or other interactive methods, on childrenâ€™s home learning and emotional status. We find that the Spring 2020 lockdown had a stronger negative effect on boys, on children attending kindergarten (in Italy) or secondary school (in France), and on children whose parents have a lower education level. We also find that the increase in the time spent in front of screen is correlated to worse learning progresses and emotional status, while the opposite is true for the time spent reading. The use of interactive distance learning methodologies, which has been much more common in Italy than in France, appears to significantly attenuate the parentsâ€™ negative perception of the impact of lockdown on the learning progress of their children.
Champeaux, H, L Mangiavacchi, F Marchetta and L Piccoli (2021), ‘Learning at home: distance learning solutions and child development during the COVID-19 lockdown‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390721
This note describes an auction for selling vaccines in a pandemic. The environment borrows from the problem of allocating positions for sponsored links on pages with online search results but recognizes the externalities that one manâ€™s vaccination imposes on another. The auction is the pivot Vickrey-Clark-Groves mechanism and, so, inherits its properties: efficiency and strategy-proofness. The auction lets each bidder bid not only on his own behalf but also onÂ behalf of others. The auction requires neither the bidders nor the auctioneer to forecast the efficacy of the vaccine or the evolution of the pandemic.
Pancs, R (2021), ‘A Vaccine Auction‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390722
The diffusion of COVID-19 and related containment measures practically halted tourism flows, which in many countries generate more than 10% of GDP. By exploiting Airbnb data covering the main touristic destinations in Europe, we investigate how the exposure to COVID-19 and the stringency of containment measures affected the market of short-term rentals over the spring and summer months of 2020. We find that the epidemic reduced dramatically both the supply of apartments available for rents and the consumersâ€™ demand, up to 9 months ahead. Prices fell as well, even at long time horizons, but with a delay. All in all, our results point to a persistent impact of COVID-19 and related containment measures on consumersâ€™ behaviour, with demand shortages potentially overcoming supply shortfalls.
Guglielminetti, E, M Loberto and A Mistretta (2021), ‘The Impact of COVID-19 on the European Short-Term Rental Market‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390723
The COVID-19 pandemic has decreased households' needs for cash and has forced households to use other payment methods. We argue that these patterns are consistent with a variety of cash management models and, in particular, that these patterns indicate an increase in the transaction cost of adjusting a household's stock of cash. The model allows us to separate the contributions to the observed decline in cash transactions from reduced total spending and from cash management decisions. We use detailed data on ATM cashÂ disbursements in Argentina and the US to estimate how much the pandemic has changed the transaction cost of using cash. This estimation shows that if the intensity of the virus doubles in a county, cash transaction cost increases by approximately 2%. The results from Argentina and the US are quantitatively consistent and imply that, given that cash and other payment methods are imperfectly substitutable, the recent increase in contactless payments due to health risks is not without cost to households.
Alvarez, F and D Argente (2021), ‘Cash-Management in Times of Covid-19‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390724
This study examines how listed firms have managed their cash holdings since the outbreak of the COVID-19 crisis, using quarterly data on publicly-traded firms in Japan. After providing an overview of developments in cash holdings since the start of the crisis, we focus on the precautionary motive for corporate cash holdings and examine the role of firmsâ€™ cash flow and volatility therein in firmsâ€™ cash holdings to find the following: (1) corporate cash holdings have increased rather than decreased since the start of the crisis; (2) an increase in firmsâ€™ cash flow has a positive impact on their cash holdings during normal times, and the sensitivity of cash holdings to cash flows was more pronounced during the first three months of the crisis; (3) firms facing higher sales volatility held more cash in the second three-month period following the start of the crisis; and (4) the cash flow sensitivity of financially constrained firmsâ€™ cash holdings during the crisis period increased more than that of unconstrained firms. Overall, the COVID-19 crisis has had a substantial impact on corporate cash management strategies and the results are consistent with the precautionary motive theory for cash holdings.
Honda, T and I Uesugi (2021), ‘COVID-19 and Precautionary Corporate Cash Holdings: Evidence from Japan‘, COVID Economics 68, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-68#392514_392944_390725