Last spring, the COVID-19 pandemic led to an unprecedented shutdown of the global economy. Governments (mostly in advanced economies) responded with an array of programs, including increased unemployment benefits, stimulus payments, small business assistance loans, and broad monetary support. In spite of these unprecedented interventions, all financed by a rapid expansion of public debt, the economic outlook continues to be very uncertain 10 months into the pandemic.
What are the likely near- and long-term consequences of the pandemic for the global economy? Which populations have been most affected? Which industries are likely to recover, and which will not? How should we evaluate the success of economic measures taken by governments in the U.S. and around the world?
Co-sponsored by the Clausen Center for International Business and Policy — and presented as part of the Berkeley Haas “New Thinking in a Pandemic” series — this “Matrix on Point” brought together a panel of scholars to discuss the economic consequences of the COVID-19 pandemic.
> Watch the video
An analysis of 17 countries in Europe and Asia found that the COVID-19 crisis hit small- and medium-sized businesses hard: In the absence of government support, the 2020 bankruptcy rate would have almost doubled to 18% on average, with even higher rates in the hardest hit sectors and countries, researchers found.
Government interventions in most countries has cushioned some of the blow, and despite the severity of the shock, the banking sector showed resiliency. Banks did not appear to be significantly impacted by the rise in loan defaults, according to a recent National Bureau of Economic Research working paper co-authored by Clausen Center Faculty Director Pierre-Olivier Gourinchas.
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The Economist magazine highlights Clausen Center Faculty Director Pierre-Olivier Gourinchas’s work on trade imbalances and monetary policy. Read the article (subscription required).
You can watch the video of New Thinking in a Pandemic, a recent webinar co-sponsored by the Clausen Center, on YouTube at https://youtu.be/EcHBD-D5CRQ. In conversation with Clausen Center Director Professor Pierre-Oliver Gourinchas, the S.K. and Angela Chan Professor of Global Management, Political Science and Economics Professor Barry Eichengreen, who is also a Clausen Center faculty member, shared his recent research on how the coronavirus pandemic might significantly reduce trust in political institutions and science for decades to come, and leave long-lasting scars on the next generation.
About the series:
“New Thinking in a Pandemic: Business, Economics, and Inclusion” is a twice-monthly series hosted by Berkeley Haas faculty to highlight cutting-edge, high-level thinking and analysis on a range of topics around business, economics, and equity during the coronavirus pandemic and beyond.
Through their research, Clausen Center faculty and visiting scholars are addressing the economic and business implications of the coronavirus pandemic, as well as policy approaches that may help lessen the damage to the global economy. The links below will take you to the articles, interviews, and working papers covering these topics. Please check back frequently for new updates.
- “Flatten the Curve of Infection and the Curve of Recession at the Same Time,” Foreign Affairs, by Pierre-Olivier Gourinchas
- “Jobs Aren’t Being Destroyed this Fast Elsewhere. Why Is That?” The New York Times, by Emmanuel Saez and Gabriel Zucman
- “The Sudden Stop,” The Indicator from Planet Money, interview with Pierre-Olivier Gourinchas
“Containment efficiency and control strategies for the Corona pandemic costs,” working paper, by Claudius Gros, Roser Valenti, Kilian Valenti, and Daniel Gros
- “Will Sky-High Unemployment Lead to Authoritarianism or Progress?” The Guardian, by Barry Eichengreen
- “Coronanomics 101,” Project Syndicate, by Barry Eichengreen
- “The Covid-19 Default Time Bomb,” Project Syndicate, by Pierre-Olivier Gourinchas and Chang-Tai Hsieh
- “EU solidarity in exceptional times: Corona transfers instead of Coronabonds,” Vox, by Daniel Gros
“How Europe Should Manage the Coronavirus-Induced Crisis, Project Syndicate,” by Daniel Gros
- “Three Steps Needed to Avoid Economic Collapse: Protect Workers’ Jobs, Small Businesses, and Banks,” (Part 1); “The Enormous Price of Poor Response,” (Part 2), and “The Special Problems of Developing Nations, and the Need for IMF, World Bank, and Multilateral Support,” (Part 3), The Authoritative Source, video interviews with Pierre-Oliver Gourinchas
- “Il faut suspendre les remboursements de dette souveraine aux créanciers des pays émergents,” Le Monde, by Chang-Tai Hsieh and Pierre-Olivier Gourinchas
- “Sovereign debt standstills:An update,” VoxEU: CEPR Policy Portal, by Patrick Bolton, Lee Buchheit , Pierre-Olivier Gourinchas, Mitu Gulati, Chang-Tai Hsieh, Ugo Panizza, Beatrice Weder di Mauro
- “How to Prevent a Sovereign Debt Disaster.” Foreign Affairs, by Patrick Bolton, Lee Buchheit, Pierre-Olivier Gourinchas, Mitu Gulati, Chang-Tai Hsieh, Ugo Panizza, Beatrice Weder di Mauro