1.
National Bureau of Economic Research Working Paper Series
; No. 27829, 2020.
Article
in English
| NBER | ID: grc-748517
ABSTRACT
We derive a parsimonious model of damage to corporate earnings from COVID-19. Using measures of expected damage from industry-level earnings forecast revisions, we estimate this model with nonlinear least squares and identifying restrictions related to forecast rationality. Forecasts in mid-May 2020 imply an earnings crash and lower earnings growth until a vaccine arrives in 1.48 years (95% CI [0.61, 5.88]). We extend our framework to account for time-varying vaccine arrival rates. Mid-August 2020 forecasts imply a vaccine arrival in 0.61 years (95% CI [0.35, 1.06]), which is due to positive vaccine news as opposed to fiscal or monetary policy news.