The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19

We examine the net benefits of social distancing to slow the spread of COVID-19 in USA. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit–cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

Defossilierung vorantreiben und Deindustrialisierung vermeiden: möglich, aber schwierig

The German economy is in difficult waters. Since the beginning of the coronavirus crisis, there has been no end to the challenges posed by interruptions in production and supply problems. Despite the need for crisis management, politicians have pledged not to lose sight of environmental sustainability. In addition, our community itself must take more responsibility for strengthening the resilience of supply, value and innovation chains. All of this will only succeed with a greater focus on economic performance;this requires a supply-side economic policy. Drawing insight from this crisis will allow for a successful transition management and a comprehensively transformed economy.

The macroeconomic effect of COVID-induced economic policy uncertainty in Nigeria: a DSGE approach

Purpose This study examined the macroeconomic effects of COVID-19-induced economic policy uncertainty (EPU) in Nigeria. The study considered the effects of three related shocks: EPU, COVID-19 and correlated economic policy uncertainty and COVID-19 shock. Design/methodology/approach First, the study presented VAR evidence that fiscal and monetary policy uncertainty depresses real output. Thereafter, a nonlinear DSGE model with second-moment fiscal and monetary policy shocks was solved using the third-order Taylor approximation method. Findings The authors found that EPU shock is negligible and expansionary. By contrast, COVID-19 shocks have strong contractionary effects on the economy. The combined shocks capturing the COVID-19-induced EPU shock were ultimately recessionary after an initial expansionary effect. The implication is that the COVID-19 pandemic-induced EPU adversely impacted macroeconomic outcomes in Nigeria in a non-trivial manner. Practical implications The result shows the importance of policies to cushion the effect of uncertain fiscal and monetary policy path in the aftermath of COVID-19. Originality/value The originality of the paper lies in examining the impact of COVID-19 induced EPU in the context of a developing economy using the DSGE methodology.

Coordination of Monetary and Fiscal Policies for Growth with Price Stability in a Post-COVID-19 Indian Economy*

During the post-COVID period, demand augmenting policies were needed and have been exercised by the Government of India to prevent the Indian economy from falling into recession. However, these demand augmenting policies seem to be inflationary as in the recent past high inflation has been observed in India. Thus, optimum combination of monetary and fiscal policies is needed to simultaneously achieve the objectives of demand growth and price stability. This paper proposes combinations of the two policies based on the results of a sign-restricted vector autoregressive (VAR) modelling framework. The experimentation was performed using sign restrictions on macroeconomic target variables viz. demand growth and inflation rate while leaving the policy variables free to suggest proposed stances to achieve desired objectives. On the basis of the empirical findings, the proposed stances of monetary and fiscal authorities were then compared with the actual stances and requisite correction in the policy behaviours has been suggested in terms of improvements to the magnitude and frequency of contraction and expansion.