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).
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
UC Berkeley economics professors Emmanuel Saez and Gabriel Zucman have published an article in The New York Times exploring what policymakers can do to protect jobs during the pandemic. They argue that the U.S. can prevent rampant unemployment and ease the way for economic recovery by applying solutions that help during national crises.
Clausen Center Director Pierre-Olivier Gourinchas’s article, “Flatten the Curve of Infection and the Curve of Recession at the Same Time,” has been published in Foreign Affairs. Gourinchas argues that flattening the infection curve inevitably steepens the macroeconomic recession one. But despite this, there are economic policy initiatives that can help contain and shorten the looming recession. If policymakers take bold and correctly timed action, they can flatten both curves to minimize harm.
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Clausen Center faculty director Pierre-Olivier Gourinchas was interviewed for NPR’s March 16, 2020, edition of The Indicator from Planet Money podcast. During the interview, he spoke about the importance of personal and business networks in the economy, how government needs to step in to ensure they are preserved, and the irreversible damage that could be done if they are not.
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