Inflation and wage growth since the pandemic.

Following the worst of the COVID-19 pandemic, inflation surged to levels last seen in the 1980s. Motivated by vast differences in pandemic support across countries, we investigate the subsequent response of inflation and its feedback to wages. We exploit the differences in pandemic support to identify the effect that these programs had on inflation and the passthrough to wages. Our empirical approach focuses on a novel dynamic difference-in-differences method based on local projections. Our estimates suggest that an increase of 5 percentage points in direct transfers (relative to trend) translates into about a peak 3 percentage points boost to inflation and wage growth. Moreover, higher inflation accentuates the role of inflation expectations on wage-setting dynamics.

Longer-run Economic Consequences of Pandemics

What are the medium- to long-term effects of pandemics? How do they differ from other economic disasters? We study major pandemics using the rates of return on assets stretching back to the 14th century. Significant macroeconomic after-effects of pandemics persist for about decades, with real rates of return substantially depressed, in stark contrast to what happens after wars. Our findings are consistent with the neoclassical growth model: capital is destroyed in wars, but not in pandemics;pandemics instead may induce relative labor scarcity and/or a shift to greater precautionary savings.

LAS SECUELAS DE LA PANDEMIA DE LA COVID-19

Los estragos humanos y económicos de la pandemia de la COVID-19 han sido devastadores y las medidas económicas paliativas a corto plazo son bien conocidas. Sin embargo, no es obvio qué características tendrán las economías mundiales una vez que la pandemia esté controlada. La historia de las pandemias desde la peste negra ofrece lecciones útiles. En este artículo se analizan tres lecciones a tener en cuenta para la configuración de la economía global en los próximos años.Alternate abstract:The devasting human and economic tolls of the COVID-19 pandemic are wellunderstood and the short-term palliative economic measures easily recognized. It is less clear what the world economies will look like once the pandemic comes under control. The history of pandemics since the Black Death offers useful lessons. In this essay I discuss some three lessons that will likely shape the global economy in the years to come.