This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2022
  4. Preliminary Program
  5. Implications of the Coronavirus Epidemic on the Macroeconomy and Inequalities
« Back to Results

Implications of the Coronavirus Epidemic on the Macroeconomy and Inequalities

Paper Session

Saturday, Jan. 8, 2022 10:00 AM - 12:00 PM (EST)

Hosted By: American Economic Association
  • Chair: Laurence Boone, Organization for Economic Co-operation and Development

Persistent COVID-19: Exploring Potential Economic Implications

Olivier Blanchard
,
Peterson Institute for International Economics
Jean Pisani-Ferry
,
Peterson Institute for International Economics

Abstract

When the COVID-19 crisis spread in early 2020, many economists assumed that a one-time shock would be followed eventually by a return close to the status quo. The emergence of new variants of SARS-CoV-2, the virus that causes COVID-19, has made this assumption questionable. If COVID-19 persists and keeps threatening lives, the most likely scenario seems to be recurrent waves of infection, leading governments to oscillate between imposing and lifting sanitary measures in response to the ups and downs of the disease. The three main economic implications of a scenario of recurrent outbreaks are i.) lasting border restrictions, as countries try to protect themselves from infections elsewhere, ii.) the likelihood of repeated confinements, and iii.) enduring effects on the composition of both supply and demand. The paper explores these channels and their policy implications.

Inequality in Life and Death

Martin Eichenbaum
,
Northwestern University
Sergio Rebelo
,
Northwestern University
Mathias Trabandt
,
Goethe University Frankfurt

Abstract

The Covid epidemic disproportionately affected the economic well-being and health of poor people. To disentangle the forces that generated this outcome, we construct a model that is consistent with the heterogeneous impact of the Covid recession on low- and high-income people. According to our model, two thirds of the inequality in Covid deaths reflect pre-existing inequality in comorbidity rates and access to quality health care. The remaining third, stems from the fact that low-income people work in occupations where the risk of infection is high. Our model also implies that the rise in income inequality generated by the Covid epidemic reflects the nature of the goods that low-income people produce. Finally, we assess the health-income trade-offs associated with fiscal transfers to the poor and mandatory containment policies.

COVID-19 Epidemics in Emerging Economies – Policies and Consequences

Balazs Egert
,
Organization for Economic Co-operation and Development
Iikka Korhonen
,
Bank of Finland
Riikka Nuutilainen
,
Bank of Finland

Abstract

In this paper we document the spread and containment efforts of COVID-19 pandemic in several large emerging economies on three continents – and economic consequences of the pandemic. While timing of the epidemic was different, output losses in all countries were large compared to the baseline. Many emerging economies experienced capital outflows at the outset of the crisis, which complicated the policy response. Generally, fiscal response has been smaller than in several industrialized countries, and monetary policy response has also been constrained in many countries – such as Turkey – by idiosyncratic vulnerabilities. Overall, key to fast recovery has been containment of the epidemic, which has been better achieved in some Asian countries such as China and Vietnam. In several Latin American countries recurring waves of infections have hampered recovery.

Discussant(s)
Jason Furman
,
Harvard University
Catherine L. Mann
,
Bank of England
JEL Classifications
  • E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
  • D3 - Distribution