Tag Archives: Coronavirus

Working from Home in the Future

In an NBER working paper, Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis argue, based on a survey of 30 000 Americans, that

… 20 percent of full workdays will be supplied from home after the pandemic ends, compared with just 5 percent before. … better-than-expected WFH experiences, new investments in physical and human capital that enable WFH, greatly diminished stigma associated with WFH, lingering concerns about crowds and contagion risks, and a pandemic-driven surge in technological innovations that support WFH.

They predict:

First, employees will enjoy large benefits from greater remote work, especially those with higher earnings. Second, the shift to WFH will directly reduce spending in major city centers by at least 5-10 percent relative to the pre-pandemic situation. Third, … a 5 percent productivity boost in the post-pandemic economy due to re-optimized working arrangements. Only one-fifth of this productivity gain will show up in conventional productivity measures, because they do not capture the time savings from less commuting.

“The Pandemic Endgame,” VoxEU, 2021

VoxEU, January 11, 2021, with Martin Gonzalez-Eiras. HTML.

Based on the CEPR discussion paper, we draw conclusions for the pandemic endgame. We explain why Israel will likely impose a harsher lockdown than other countries, especially poor ones. And why we should expect “inverse lockdowns”—measures to stimulate social interaction.

Covid-19 Superspreading Events Database

By Koen Swinkels, on Medium, a database and preliminary interpretation subject to various caveats. The preliminary suggested interpretation is as follows:

  • Nearly all SSEs in the database — more than 97% — took place indoors
  • The great majority of SSEs happened during flu season in that location
  • The vast majority took place in settings where people were essentially confined together, indoors, for a prolonged period (for example, nursing homes, prisons, cruise ships, worker housing)
  • Processing plants where temperatures are kept very low (especially meat processing plants) seem particularly vulnerable to SSEs

“Tractable Epidemiological Models for Economic Analysis,” CEPR, 2020

CEPR Discussion Paper 14791, May 2020, with Martin Gonzalez-Eiras. PDF (local copy).

We contrast the canonical epidemiological SIR model due to Kermack and McKendrick (1927) with more tractable alternatives that offer similar degrees of “realism” and flexibility. We provide results connecting the different models which can be exploited for calibration purposes. We use the expected spread of COVID-19 in the United States to exemplify our results.

“On the Optimal ‘Lockdown’ during an Epidemic,” CovEc, 2020

Covid Economics, April 2020, with Martin Gonzalez-Eiras. PDF.

We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently experienced by the US optimally triggers a reduction in economic activity by two thirds, for about 50 days, or approximately 9.5 percent of annual GDP.

“On the Optimal ‘Lockdown’ during an Epidemic,” CEPR, 2020

CEPR Discussion Paper 14612, April 2020, with Martin Gonzalez-Eiras. PDF (local copy).

We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently experienced by the US optimally triggers a reduction in economic activity by two thirds, for about 50 days, or approximately 9.5 percent of annual GDP.

Medical Specialist Condemns Swiss Covid-19 Preparations and Response

In Die Mittelländische Zeitung, a Swiss doctor criticizes Switzerland’s preparations and response to Covid-19. He points to

  • Lack of preparation by political decision makers
  • Misleading communication by federal health officials
  • Their apparent lack of awareness of academic work on the topic
  • Arrogance in Switzerland and the West vis-à-vis China and other far eastern countries
  • Sensationalist scare mongering in the media
  • Calls for systematic infection of groups that are less at risk

Informative as far as medical aspects are concerned. Not convincing when criticizing statistical approaches to grasping the problem. Questionable as far as ex-post validation of eight studies and calls for action are concerned.

Deaths Per Capita versus Confirmed Cases Per Capita

Data from April 6, 2020.

Iceland and Luxembourg have many more confirmed cases per capita than other countries (either because they have more cases or better information). Mortality per confirmed case is highest in Italy, Spain, France, Belgium, Netherlands, UK.

Source: Author’s calculations based on Johns Hopkins data and World Bank data.

“Wirtschaftspolitik angesichts von Covid-19: Lastenteilung, aber keine Preismanipulationen (Economic Policy Responses to Covid-19: Burden Sharing, But no Price Distortions),” ÖS, 2020

Ökonomenstimme, 3 April 2020. HTML. Shorter version published in NZZ.

The aggregate Covid-19 shock calls for transfers of the type a pandemic insurance would have brought about. But we must not distort relative prices. They have to reflect scarcity, to provide incentives to overcome it. (This applies within countries but also across.)

“Preise müssen sich frei bilden können (Prices Must Reflect Scarcity),” NZZ, 2020

NZZ, 2 April 2020. PDF.

The aggregate Covid-19 shock calls for transfers of the type a pandemic insurance would have brought about. But we must not distort relative prices. They have to reflect scarcity, to provide incentives to overcome it. (This applies within countries but also across.)

Switzerland Peps Up SMEs

How Switzerland peps up SMEs: Banks are encouraged to extend credit (at 0%). The treasury guarantees the loans. The SNB refinances banks and accepts the guaranteed loans as collateral. Fast and efficient. Eventually, some of these loans will turn into grants of course. But that’s ok; the first-best response to a shock with asymmetric effects does involve transfers if markets are incomplete.

Data and Research on the Coronavirus

The first of a long sequence of nice papers on the virus by economists are out:

  • Martin Eichenbaum, Sergio Rebelo, and Mathias Trabandt (2020), The Macroeconomics of Epidemics. NBER wp 26882. (My comments on Twitter.)
  • James Stock (2020), Coronavirus Data Gaps and the Policy Response to the Novel Corona Virus. Mimeo. Conclusion: There is an urgent need to reliably estimate the asymptomatic rate—the share among the infected who do not show strong symptoms.

For more recent papers, see for example CEPR’s Covid Economics: Vetted and Real-Time Papers.

Data:

Estimates and forecasts:

Oxford University’s government response tracker.

Coronavirus link database.

Updated: March 26, April 26, …

Coronavirus: The Hammer and the Dance

An excellent article written by Tomas Pueyo and published on Medium.

Summary of the article: Strong coronavirus measures today should only last a few weeks, there shouldn’t be a big peak of infections afterwards, and it can all be done for a reasonable cost to society, saving millions of lives along the way. If we don’t take these measures, tens of millions will be infected, many will die, along with anybody else that requires intensive care, because the healthcare system will have collapsed.

… Here’s what we’re going to cover today, again with lots of charts, data and models with plenty of sources:

  1. What’s the current situation?
  2. What options do we have?
  3. What’s the one thing that matters now: Time
  4. What does a good coronavirus strategy look like?
  5. How should we think about the economic and social impacts?

When you’re done reading the article, this is what you’ll take away:

  • Our healthcare system is already collapsing.
  • Countries have two options: either they fight it hard now, or they will suffer a massive epidemic.
  • If they choose the epidemic, hundreds of thousands will die. In some countries, millions. And that might not even eliminate further waves of infections.
  • If we fight hard now, we will curb the deaths.
  • We will relieve our healthcare system.
  • We will prepare better.
  • We will learn.
  • The world has never learned as fast about anything, ever.
  • And we need it, because we know so little about this virus.
  • All of this will achieve something critical: Buy Us Time.

If we choose to fight hard, the fight will be sudden, then gradual. We will be locked in for weeks, not months. Then, we will get more and more freedoms back. It might not be back to normal immediately. But it will be close, and eventually back to normal. And we can do all that while considering the rest of the economy too.