Heterogeneous responses in Google Trends measures of well-being to the COVID-19 dynamic quarantines in Chile.

We study how the Chilean population's well-being responded to the strategy implemented by their health authorities, known as Dynamic Quarantine, to contain the spread of coronavirus in which municipalities periodically entered and exited lockdowns. This unique scheme, together with the population's socioeconomic heterogeneity, facilitates the estimation of changes in this well-being as differentiated by socioeconomic status. Using Google Trends to compute measures of well-being, we find strong evidence that socioeconomic status induces heterogeneity in these changes; thus, neglecting this heterogeneity may lead to misleading prescriptions for the public policy that addresses the psychological effects of lockdowns.

Stock market volatility and the COVID-19 reproductive number.

The media has prominently featured the totemic reproductive number R in its COVID-19 coverage despite being an imperfect measure of the degree of infectivity of the virus. As such, it conveys information to the public regarding the state of the pandemic that affects market sentiment. We analyze how news about R affects the volatility in stock markets worldwide and find that when R is greater than one, which means the spread of the disease should soar, it has a positive and significant effect on volatility. Our results hold after controlling for government interventions and several robustness checks.

FX markets’ reactions to COVID-19:Are they different?

In this paper, we empirically investigate the impact of the COVID-19 pandemic on FX markets. We find important differences between COVID-19 and previous high-risk episodes: the Global Financial Crisis, the Swiss National Bank’s removal of the Swiss frank/euro floor, and Brexit. Contrary to these episodes, the USD did not show any safe haven characteristics during the pandemic. Furthermore, the estimated volatility and non-parametric value-at-risk of three currency portfolios indicate that COVID-19 was not as risky as previous stressful events. We provide evidence that investors could minimize COVID-19 risk by investing in the Canadian dollar and the Japanese yen, and by reducing their exposure to European currencies.