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).
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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Clausen Center faculty director Pierre-Olivier Gourinchas has written a paper exploring how public health efforts to flatten the outbreak curve for the COVID-19 coronavirus inevitably steepens the macroeconomic recession curve. The pandemic has the potential to wreak economic havoc, but macroeconomic support can lessen the damage.
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