As the Coronavirus continues to spread across the world, economic uncertainty continues to grow. In an effort to better understand the economic impact of this pandemic, our faculty members have been hard at work publishing new research. Below is a selection of published papers and articles from our esteemed faculty members and alumni on the potential economic impact of the coronavirus.
Read PhD Alumni Robert Fairlie's Article "The Impact of COVID-19 on Small Business Owners: Continued Losses and the Partial Rebound in May 2020"
July 23, 2020 – from The National Bureau of Economic Research
Social distancing restrictions and demand shifts from COVID-19 shuttered many small businesses and entrepreneurs in the first month of widespread shelter-in-place restrictions. Fairlie (2020) finds that 22 percent of small business owners were inactive in April 2020 with disproportionate impacts on African-American, Latinx, immigrant, and female business owners. What happened in the second month of social distancing restrictions? Were there further closures or a rebound? This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the May 2020 CPS – the second month capturing effects from mandated restrictions.
Matthias Doepke's Research Cited in the New York Times Article "Pandemic Parenting Was Already Relentless. Then Came Summer."
June 30, 2020 – from The New York Times
American parents spend more time and money on their children than ever — and that was before the pandemic. Now, with remote school ending for the summer and a far-from-normal fall expected, parenting is becoming only more demanding. It’s not just that children need more supervision, with their usual activities closed. Unlike previous generations of parents, today’s feel pressured to use time with their children for active engagement and continual teaching. Now that pressure is compounded by fears about missing months of education, and about widening gaps between children whose parents can provide significant at-home enrichment and those whose parents cannot.
Read Seema Jayachandran's Article for the NYT "How a Raise for Workers can be a Win for Everybody"
June 26, 2020 – from New York Times
Two new studies show that giving pay raises to low-wage workers is good for consumers, too. That finding could add momentum to efforts to help grocery store clerks, nursing home workers and delivery drivers who are being paid a minimum wage despite their efforts being so essential during the current pandemic.
Read "Hard Data for Hard Choices" by Alison Fahey , Nathanael Goldberg and Dean Karlan
June 23, 2020 – from www.project-syndicate.org
Before COVID-19 arrived, social scientists had already established that cash transfers and mobile money are two of the most effective tools for assisting the poor and vulnerable in difficult conditions. Now is the time for governments to act on those findings, and to build up additional data for the future.
NYT Article "The Pandemic Has Reshaped American Fatherhood. Can It Last?" Cites Gender Research by Matthias Doepke, Titan Alon, Jane Olmstead-Ramsey and Michèle Tertilt
June 23, 2020 – from New York Times
Evidence from Sweden shows even short stints of time at home for fathers can have long-term consequences.
Guido Lorenzoni's recent paper cited in the New York Times Article "Don’t Lose the Thread. The Economy Is Experiencing an Epic Collapse of Demand"
June 4, 2020 – from New York Times
Despite it all — a nation on edge, with an untamed pandemic and convulsive protests over police brutality — for the first time in three months there is a scent of economic optimism in the air. Employers added millions of jobs to their payrolls in May, and the jobless rate fell, a big surprise to forecasters who expected further losses. Businesses are reopening, and the rate of coronavirus deaths has edged down. The Trump administration has begun pointing to what are likely to be impressive growth numbers as the economy starts to pull out of its deep hole.
Matthias Doepke's Research Featured in NY Times Article "Pandemic Could Scar a Generation of Working Mothers"
June 3, 2020 – from NY Times
Working from home has highlighted and compounded the heavier domestic burden borne by women. Now office reopenings may force new career sacrifices.
Guido Lorenzoni's Research Cited in the Financial Times: "The deflation threat from the virus will be long lasting"
May 6, 2020 – from The Financial Times
It is already obvious that the initial impact of the Covid-19 economic crisis will be strongly disinflationary. Prices have fallen sharply in sectors that have been most affected by the lockdowns, including restaurants, hotels, airlines and housing. Furthermore, the past week has seen an extraordinary dip into negative territory for oil prices, especially at the front end of energy markets. Headline US inflation will, therefore, fall markedly below the Federal Reserve’s 2 per cent target, while the eurozone and Japan will record negative inflation in a matter of months. That, however, is far from the end of the story.
Martin Eichenbaum's Research Cited in Northwestern Now: "‘Smart containment’ can save lives, shorten the recession"
April 27, 2020 – from Northwestern Now
Economists Martin Eichenbaum and Sergio Rebelo say selective quarantine can reduce the number of COVID-19 deaths while lessening negative economic impacts.
Guido Lorenzoni's Research Highlighted in The Economist: "Covid-19 could lead to the return of inflation—eventually"
April 27, 2020 – from The Economist
Inflation in the rich world resembles a fairy-tale beast. Older members of society frighten younger ones with stories of the creature’s foul deeds, but few serious people expect to see one and some doubt it ever existed. Although high inflation seemed a fixture of the economic landscape in the 1970s, changes to policy and the structure of the global economy since have ushered in four decades of ever meeker growth in prices. As covid-19 shutters businesses and leaves supermarket shelves bare, some economists fret that the pandemic could lead to inflation making an unwelcome return.
Check Out Joel Mokyr's Opinion Piece on CNN.com "Viruses and Other Germs: Winning a Never Ending War"
April 24, 2020 – from CNN
Humans are at war with a foreign and hostile life-form. And no, this is not the "War of the Worlds" — it is a war we have been fighting since the beginning of history, and long before. Human history can be described as an everlasting struggle between people and microscopic pathogens, as author and historian William McNeill taught us a generation ago. We are dealing with a deadly, stubborn, and protean set of enemies. Some are viruses, some are bacteria and some are parasites. Each one is different in how they make us sick and how we fight them.
Martin S. Eichenbaum's Research Cited in Kellogg Insight Article: "Containing COVID-19 Will Devastate the Economy. Here’s the Economic Case for Why It’s Still Our Best Option"
April 6, 2020 – from Kellogg Insight, Sergio Rebelo, Matthias Trabandt
It’s a brutal trade-off: inducing massive economic suffering in order to save human lives. That’s what policymakers across the world are weighing as they decide whether to shutter millions of stores, restaurants, and offices in hopes of curtailing the spread of COVID-19. These drastic policies, enacted across much of the U.S., will undoubtedly save lives. Yet the economic toll of these measures is expected to be in the trillions, leading some commentators, including President Trump, to argue that the cost of stemming the pandemic could soon exceed the human cost of the pandemic itself. However, new research suggests that not shuttering these businesses would be much costlier to society, once both the economic and human costs are factored in.