Macroeconomic Dynamics and Reallocation in an Epidemic

Krueger, Dirk; Uhlig, Harald; Xie, Taojun

doi:10.2139/ssrn.3584436

Cited by 73 publications

(131 citation statements)

References 9 publications

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“…In reality, enforcement capabilities are probably more nuanced, but it is almost certainly much easier in formal places of business than in informal activities. The possibility of moving into the informal sector in response to a lockdown is similar to the movements out of market activities at the start of the pandemic emphasized in Krueger, Uhlig, and Xie (2020), and broadly consistent with the evidence of Zhao, Storesletten, and Zilibotti (2019) that workers respond to economic downturns by moving back into agriculture.…”

Section: Households and Preferencessupporting

confidence: 79%

How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?

Alon¹,

Kim²,

Lagakos³

et al. 2020

130

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This paper quantitatively analyzes how policy responses to the COVID-19 pandemic should differ in developing countries. To do so we build an incomplete-markets macroeconomic model with heterogeneous agents and epidemiological dynamics that features several of the key distinctions between advanced and developing economies germane to the pandemic. We focus in particular on differences in: age structure, fiscal capacity, healthcare capacity, informality, and the frequency of contacts between individuals at home, work, school and other locations. The model predicts that blanket lockdowns are less effective in developing countries, saving fewer lives per unit of lost GDP. In contrast, age-specific policies are even more effective, since they focus scarce public funds on shielding the smaller population of older individuals. School closures are also more effective at saving lives in developing countries, providing a greater reduction in secondary transmissions between children and older adults at home.

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Section: Households and Preferencessupporting

confidence: 79%

How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?

Alon¹,

Kim²,

Lagakos³

et al. 2020

130

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“…Our paper complements the burgeoning body of work on the macroeconomic impact of the Covid-19 pandemic (see, among others, Acemoglu et al, 2020;Atkeson, 2020;Alvarez, Argente, and Lippi, 2020;Eichenbaum, Rebelo, and Trabandt, 2020;Glover et al, 2020;Kaplan, Moll, and Violante, 2020;Krueger, Uhlig, and Xie, 2020). Most closely related are Baqaee and Farhi (2020a,b) and Barrot, Grassi, and Sauvagnat (2020), who study the eects of the lockdown on GDP declines in input network economies, and Çakmakl et al (2020), who explore transmission of demand shocks in a small open economy context.…”

Section: Related Literaturementioning

confidence: 58%

Global Supply Chains in the Pandemic

et al. 2020

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We study the role of global supply chains in the impact of the Covid-19 pandemic on GDP growth for 64 countries. We discipline the labor supply shock across sectors and countries using the fraction of work in the sector that can be done from home, interacted with the stringency with which countries imposed lockdown measures. Using the quantitative framework and methods developed in Huo, Levchenko, and Pandalai-Nayar (2020), we show that the average real GDP downturn due to the Covid-19 shock is expected to be-29:6%, with one quarter of the total due to transmission through global supply chains. However, "renationalization" of global supply chains does not in general make countries more resilient to pandemic-induced contractions in labor supply. The average GDP drop would have been-30:2%in a world without trade in inputs and final goods. This is because eliminating reliance on foreign inputs increases reliance on the domestic inputs, which are also disrupted due to nationwide lockdowns. In fact, trade can insulate a country imposing a stringent lockdown from the pandemic-shock, as its foreign inputs are less disrupted than its domestic ones. Finally, unilateral lifting of the lockdowns in the largest economies can contribute as much as 2.5% to GDP growth in some of their smaller trade partners.

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“…2 See Acemoglu et al (2020), Alfaro et al (2020), Alvarez et al (2020), Atkeson (2020a,b), Baqaee and Farhi (2020a,b), Berger et al (2020), Birinci et al (2020), Chari et al (2020), Craig and Hines (2020), Eichenbaum et al (2020a,b), Fang et al (2020), Farboodi et al (2020), Glover et al (2020), Gregory et al (2020), Jones et al (2020), Kaplan et al (2020), Krueger et al (2020), and Piguillem and Shi (2020), among others. policies during a pandemic.…”

Section: Introductionmentioning

confidence: 99%

Pandemic Lockdown: The Role of Government Commitment

Moser¹,

Yared²

2020

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and the CEPR/IHEID Webinar for helpful comments. Rachel Williams provided excellent research assistance. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis, the Federal Reserve System, or the National Bureau of Economic Research. Any errors are our own. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Macroeconomic Dynamics and Reallocation in an Epidemic

Cited by 73 publications

References 9 publications

How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?

How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?

Global Supply Chains in the Pandemic

Pandemic Lockdown: The Role of Government Commitment

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