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The impact of COVID-19

Research explores how the pandemic has changed the economy—and the world

 
Associated Press

The world has changed, suddenly and unexpectedly. What began as a regional health crisis in late 2019 had, by March of 2020, mushroomed into a global calamity the likes of which had not been seen for a century, touching virtually every aspect of modern life and endangering countless lives, along with the entire global economy.

But although we are experiencing an event without modern precedent, we are not entirely in the dark. A flood of new research, as well as the existing academic literature, is providing the insights that can help policy makers, investors, businesspeople, and everyone else cope with the uncertain terrain ahead.

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“Every critical relationship an entrepreneur must develop and maintain has changed.”

business

COVID-19 is changing key business relationships

 

“Consumers generally dismiss news from policy makers as irrelevant to their own financial futures.”

policy

Americans have little confidence in COVID-19 stimulus plans

 

“Households without cash on hand spent almost half their checks within 10 days.”

policy

How effective were stimulus checks in the US?

 

“It’s just going to be harder to build relationships with people, to build up trust.”

business

How will COVID-19 change management and leadership?

 

“Bipartisan reactions would seem to facilitate more compliance.”

society

John Barrios: Why partisanship affected Americans’ pandemic perceptions

 

“Our results suggest that legal restrictions per se didn’t have a big effect on people’s choices to stay at home.”

economy | policy

Fear, not government shutdowns, chilled the economy

 

“Gig work guards against human-capital depreciation.”

economy

John Barrios: How the gig economy could support pandemic recovery

 

“Venture capitalists are all unique, but they all want one thing—to make a significant return on their investments.”

markets | business

COVID-19 isn’t changing what investors want

 

“Certain hubs of vital economic activity could remain open.”

policy

How New York City could reopen its economy, neighborhood by neighborhood

 

“Most people perceive bankruptcy as death. This isn’t necessarily true.”

policy | business

Capitalisn’t: Should Luigi’s Pizza file for bankruptcy?

 

“In practice, the FDA swings a bit like a pendulum between prioritizing safety and prioritizing efficacy.”

policy | health care

Will COVID-19 speed up the drug-approval process?

 

“How much of a role does media itself play in whether people will follow or reject social-distancing guidelines?”

society

Fox News causes viewers to disregard social distancing

 

“If the government wants to keep small businesses afloat, its support must be enacted quickly and generously.”

business

US small businesses have little cushion against prolonged disruptions

 

“Residents of Seoul used the information to strategically alter their commuting and social habits.”

policy

How South Korea limited COVID-19 deaths and economic damage

 

“The question is, how do we deal with this mountain of debt?”

economy

Lubos Pastor: Why inflation could follow the crisis

 

“We do find Republicans and Democrats behaving similarly.”

economy | society

Constantine Yannelis: Who has been stockpiling during the crisis?

 

“I get a tremendous amount of energy by being in a room with other people.”

society

Lindsey Lyman: What we’re losing by working remotely

 

“People build their families on the assumption there will be a functioning marketplace for childcare.”

economy | society

More than 50 million Americans can’t return to work fully until schools reopen

 

“It’s important to know what work is going to look like during this period of social distancing.”

economy | society

Brent Neiman: Most of us can’t work from home

 

“We need a plan that allows us to make use of the ventilators that already exist.”

health care | policy

Dan Adelman: Better allocating ventilators could save thousands of lives

 

“Incentivized avoidance of job destruction is going to be important, we believe, in the recovery.”

policy

Veronica Guerrieri: How policy makers can help save jobs

 

“We need social connection more now than arguably at any other time.”

society

Nicholas Epley: Policies should prioritize human well-being

 

“I predict we will see a more formalized approach to risk mitigation.”

business

Nicole DeHoratius: Supply chains are rethinking their low-cost focus

 

“In this integrated world, is it even possible to go it alone?”

global impact | policy

Raghuram G. Rajan: How COVID-19 could prompt global cooperation

 

“Is this a moment in which we should stimulate demand or not?”

economy | policy

Veronica Guerrieri: Is the pandemic a supply- or demand-side shock?

 

“Every single country has exactly the same problem. It’s a shock that hits everybody equally.”

global impact | policy

Chang-Tai Hsieh: We need a plan to avoid a humanitarian and economic catastrophe

 

“Banks need to keep lending so that companies can keep making their payments.”

policy

Haresh Sapra: Now is not the time to relax accounting standards

 

“The accuracy of antibody tests is still in question.”

health care | policy

What percentage of the population has contracted COVID-19?

 

“Direct health spending should really be the highest priority, by a large order of magnitude.”

policy

Joseph S. Vavra: This is not a normal recession. A normal response will not do.

 

“We can’t get back to our original level until we solve the medical problem.”

economy | policy

Chad Syverson: What has to happen for people to go back to work

 

“The responses suggest a slow and difficult recovery.”

economy

How much exactly have COVID-19 lockdowns affected the economy?

 

“Once you allow the ventilators to circulate between states, you can get substantially more benefits.”

health care | policy

Dan Adelman: To save lives, move ventilators between states

 

“Conversation over the internet is something, but it’s not really the thing that psychologists believe keeps people healthy.”

society

Ayelet Fishbach: What’s the mental toll of life during a pandemic?

 

“I think there’s a lot of interesting stuff to be learned about what it is exactly that they did.”

policy

Chang-Tai Hsieh: How big an effect did lockdowns have on China’s economy?

 

“Some financial institutions may have been more eager than others to participate in the Paycheck Protection Program.”

business | policy

Small-business loans didn’t reach their targets

 

“Just because we’re in a crisis doesn’t mean fiscal stimulus is a free lunch. We ought to use it as needed, but use it wisely.”

markets | policy

Steven J. Davis: How COVID-19 is disrupting business, markets, and policy

 

“Overall, 42 percent of pandemic-related layoffs will be permanent, the researchers estimate.”

economy

COVID-19 will end some jobs, and transform others

 

“Bailouts raise unnerving questions about how the economy might be rigged in favor of plutocratic outcomes.”

business | society

COVID-19 will change the way we think of risk

 

“Decision makers often find themselves drowning in data, yet truly vital information is not available.”

business

How leaders can rise to the challenge of COVID-19

 

“This advance of virtual working may be particularly important for increasing the participation of women.”

society | economy

Veronica Guerrieri: Why the crisis could prompt more women to join the labor market

 

“The prevalence of offshore issuance may make it less clear in a crisis who gets paid.”

markets | global impact

Global investment statistics hide potential risks

 

“If you think the US needs to put in place a rescue package, well, every other country needs to do the same thing.”

policy | global impact

Chang-Tai Hsieh: Could COVID-19 spark a sovereign-debt crisis?

 

“This might be the time for businesses to take a hard look at themselves and assess potential ways forward.”

business

Pivoting in a time of crisis

 

“There is a particular need for coordination among policies in different countries.”

policy | global impact

Veronica Guerrieri: What the crisis means for the European Union

 

“The lack of data is a problem, and that’s also going to be a problem in thinking about the exit strategy.”

policy

Randall S. Kroszner: Why Asia acted faster than the rest of the world

 

“Midtown is an economic juggernaut, and the cost of shutting it down is just too high.”

policy

How to reopen cities, neighborhood by neighborhood

 

“Sometimes we forget that there are also huge cons of interacting with other people.”

society

Chang-Tai Hsieh: Will COVID-19 hamper the growth of cities?

 

“That’s very scary and problematic and suggests there’s going to be a really severe economic hit.”

economy

Brent Neiman: How many people can work from home?

 

“If these programs are successful, the financial sector shouldn’t require its own bailout.”

policy

Two proposals to keep the lights on at small businesses

 

“I could see this really affecting community colleges, and I could see it affecting lower-tier schools.”

economy

Capitalisn’t: Coronavirus—the future of universities

 

“Kids who grow up in poor neighborhoods are going to have even worse access to education than before.”

economy | society

Veronica Guerrieri: The crisis could widen the gap between rich and poor neighborhoods

 

“The banks are not the bad guys here. But they have an opportunity to be the good guys.”

business | policy

Haresh Sapra: Why current accounting rules could stop banks from lending

 

“The recession ultimately needs to be mollified by a combination of stimulus and social support.”

economy | policy

How COVID-19 shocked both supply and demand

 

“It’s different now. The Secretary of the Treasury’s now locked arms with the Fed.”

policy

Randall S. Kroszner: Is the Fed being too bold in its response to the crisis?

 

“We have a real risk that debt crises ensue.”

economy | global impact

Brent Neiman: What issues could hinder an international economic recovery?

 

“In the span of just one month, this rate far exceeded the decline experienced from 2008 to 2016.”

economy

Why US unemployment is even worse than the official numbers say

 

“I hope we are learning how to use technology for what it’s really good for, which is connecting us at a distance.”

society

Nicholas Epley: What will be the long-term psychological impact of COVID-19?

 

“The sad lessons of a thousand years of government borrowing and its limits can be forgotten, but not erased.”

policy

How the Fed plans to pay the country’s bills

 

“Why not use the opportunity to look at decisions that have been postponed that require large investments?”

business

Haresh Sapra: How the crisis could prompt innovation

 

“We don’t have the option of borrowing money from Mars. So we’ve got to think of something else.”

policy | global impact

Chang-Tai Hsieh: Why poor countries need a debt moratorium

 

“A number of those jobs will have to change. There will have to be some transition.”

policy

Randall S. Kroszner: Rethinking unemployment insurance in response to the crisis

 

“Lower-income households found it hardest to smooth their outlays, the researchers find.”

economy

Business shutdowns hurt those just above the poverty line

 

“This is precisely the time when banks need to be monitoring the risks of borrowers.”

policy

Haresh Sapra: The crisis should not delay stricter accounting rules

 

“I worry that policy is trying to freeze in place the way the world was before the shock happened.”

policy | economy

Randall S. Kroszner: Many economic projections are too optimistic

 

“This cost would justify sizable increases in world spending on antiviral drugs and flu vaccines.”

policy | society

Some economics of flu pandemics

 

“Right now we’re living in a time where we see very clearly the value of being responsive.”

business

Nicole DeHoratius: How will COVID-19 change the supply chain?

 

“I think in the short run it’s going to be a very slow return to anything that’s close to normal.”

economy | society

Randall S. Kroszner: We won’t go back to “business as usual”

 

“We must all acknowledge the uncertainty inherent in our analyses.”

policy

No one has all the answers for COVID-19 policy

 

“Much of the exercise many Americans get is just normal workday commuting, interacting.”

health care | society

Lindsey Lyman: How does remote working affect your health?

 

“All the big capitalist success stories are those with a strong government capacity.”

policy

Postcrisis: A new role for the state

 

“Bankruptcy provides for a much more equitable distribution of the sacrifice.”

policy | economy

Capitalisn’t: Coronavirus—the state bankruptcy debate

 

“The signs are that the supply chain is doing quite well.”

business

Nicole DeHoratius: How healthy are supply chains following the advent of COVID-19?

 

“You’ll forego some of the benefits of globalization, but I don’t think you’ll forego all of them.”

economy

Randall S. Kroszner: The crisis will partially reverse globalization

 

“Policy makers can maximize the usefulness of each machine by making sure it’s in the right place at the right time.”

policy | health care

States could save lives by sharing ventilators with each other

 

“When people feel disconnected from others, they are not well, physically speaking.”

policy | health care

Nicholas Epley: Why mental well-being should be part of the COVID-19 policy response

 

“I think that we won’t end up Monday-morning quarterbacking, as was very much the response to the last crisis.”

policy

Constantine Yannelis: Have real-time data helped us address the crisis?

 

“The trend towards more concentration in business activity is probably going to continue.”

economy

Chad Syverson: How could COVID-19 reshape the US economy?

 

“This is a time to focus on defense first.”

society | business

How to lead organizations through the COVID-19 crisis

 

“It’s a wonderful field experiment: Let’s have everybody work from home and see if they like it.”

society

Ayelet Fishbach: How soon will life go back to normal after the crisis?

 

“Some insurers—AIG, Brighthouse, and Lincoln—saw drawdowns of 65 percent or more.”

markets

COVID-19 has exposed the fragility of the life-insurance industry

 

“There are significant costs to working this way that I believe we’re not sufficiently reflecting on.”

society

Lindsey Lyman: Working from home has some big costs

 

“It’s interesting to me that every time there’s a major crisis, people talk about accounting.”

business | policy

Haresh Sapra: How politicians and companies can regain trust

 

“The difference in this event is that it’s global. It’s happening at all places at all times.”

business

Nicole DeHoratius: How do you prepare a supply chain for disaster?

 

“Regardless of how we choose to bear them, the costs of the pandemic will be large.”

policy

Some basic economics of COVID-19 policy

 

“We do find Republicans and Democrats behaving very similarly.”

society

Constantine Yannelis: How has COVID-19 shaped consumer behavior?

 

“Opportunities for at-home work vary greatly by region.”

business | economy

Only 37 percent of US jobs can be done at home

 

“Are individual choices about whether to stay home or go out the right way to make this decision collectively?”

policy

Capitalisn’t: Coronavirus—the risk of reopening

 

“You can reach out and connect to others, and others are going to be more receptive than you might guess.”

society

Nicholas Epley: The power of social connection in the age of social distancing

 

“If we have a lot of uncertainty in a situation, we should be more cautious, not less cautious.”

policy

Constantine Yannelis: Policymaking at a time of uncertainty

 

“Controlling prices to prevent gouging won’t help people in vulnerable groups.”

society

How retailers inadvertently contribute to hoarding

 

“Patience is hard, and being patient when you have a lot of uncertainty makes it even harder.”

policy | society

Ayelet Fishbach: How can policy makers help people cope with uncertainty?

 

“When those links are destroyed, you’re not going to get those things back.”

policy | economy

Joseph S. Vavra: Could the COVID-19 crisis permanently affect the US economy?

 

“If only we could just ‘let the data speak’—but that is not how most model building proceeds.”

policy

How quantitative models can help policy makers respond to COVID-19

 

“Some economic activities could resume in a limited, thoughtful manner.”

economy | policy

A simple framework to help revive the US economy

 

“If there’s one thing that policy makers should be focusing on, it’s making sure that small businesses have access to liquidity.”

business | policy

Constantine Yannelis: The challenge for businesses in the age of COVID-19

 

“About half of this projected contraction is due to COVID-19-related uncertainty.”

economy

The US economy could contract 11 percent in 2020

 

“What we are concerned about is the sustainability in the long term, not in the short term.”

economy | policy

Capitalisn’t: Coronavirus—how are we going to pay for it?

 

“We should think about, who’s ultimately best able to bear the consequences of this recession?”

Policy

Joseph S. Vavra: Has the US done enough to help small businesses?

 

“If the directly affected firms fire workers, these workers will buy less from all types of firms.”

economy

Why industry-specific shocks can damage the entire economy

 

“This is not just about global supply chains being disrupted for some time and a locked-down economy.”

economy | global impact

Raghuram G. Rajan: How will COVID-19 shake the global economy?

 

“In places with more Trump voters, residents had exhibited a muted response to preliminary COVID-19 cases.”

society

Partisan bias affects what Americans think of the coronavirus

 

“I think people have realized that some regulatory issues are more of a hindrance in this situation than a help.”

Policy

Chad Syverson: Has the US done enough to combat COVID-19’s economic damage?

 

“The sooner regulators act, the better-prepared banks will be for weathering further crises.”

policy

Policy makers’ COVID-19 accounting gift to banks

 

“The data confirm that an expectation of trouble ahead drives spending decisions.”

society

Who stocked up before COVID-19 hit

 

“Businesses themselves see a very bad hit to their sales revenue, to their operations, in 2020.”

business

Steven J. Davis: How has COVID-19 affected businesses?

 

“We are going to restart again much poorer.”

policy

Capitalisn’t: Coronavirus—how to make an exit

 

“These actions to protect public health had an enormous, negative impact on economic activity.”

policy

What were the preliminary economic effects of China’s lockdowns?

 

“We must be aware that we live on this one planet, where this crisis can come back to hit us from anywhere.”

global impact

Raghuram G. Rajan: COVID-19 is a global problem that needs a global solution

 

“These areas might have difficulty reaching out and getting this access to credit.”

business | economy

In small-business lending, will some areas get left behind?

 

“Recent stock-market behavior is an early and visible reflection of the (expected) damage.”

markets

The coronavirus has exerted historic influence on equity markets

 

“Right now, our goal really is not to encourage spending.”

policy

Joseph S. Vavra: Is economic stimulus the right response to the crisis?

 

“If you’re in a slum, it’s very hard to stay some distance from people within your house, let alone people in the community.”

global impact

Raghuram G. Rajan: How will poor countries cope with COVID-19?

 

“The foundation of what makes experiments informative is randomization.”

health care

Good decisions require good experiments

 

“Our evolution as people didn’t teach us to connect over just the medium of voice, or seeing an e-mail.”

society

Ayelet Fishbach: How will social distancing affect our mental well-being?

 

“Do you want people to get out of their pajamas and back to work? Then we NEED TO DO MORE TESTS.”

policy

Will the US need to expand testing before lifting lockdowns?

 

“Once the government has the response under control, it has to rebuild hope.”

global impact | policy

How India can meet its greatest challenge in recent history

 

“When the US stock markets went into crisis mode, the yield curve didn’t always move in the usual pattern.”

markets | economy

How the Treasury yield curve reflects worry

 

“In some ways, China’s actions set the tone for the global response to the crisis.”

policy | global impact

China’s economic response to COVID-19 has helped, for now

 

“My assumption is that this will change the way we look at safety nets.”

business | economy

Raghuram G. Rajan: How will COVID-19 reshape the gig economy?

 

“Common monetary policy combined with unlinked national fiscal policies has never made sense.”

policy

How should European policy makers respond to COVID-19?

 

“We've seen administrations finally come to recognize the value of professional expertise.”

society

Raghuram G. Rajan: Could COVID-19 spell the end of political populism?

 

“The stock market reaction to the coronavirus pandemic has been, in some respects, unprecedented.”

Markets

Steven J. Davis: How has COVID-19 hit the stock market?

 

“My concern is, winners and losers are going to be decided by something other than standard competition.”

policy

Michael Minnis: How small businesses could miss out on stimulus funds

 

“Is it really feasible to keep spending ‘anything it takes’ every 10 years?”

Policy

Raghuram G. Rajan: Will we have the money to tackle the next pandemic?

 

“The direct effects of the recession are very disproportionately hitting the people least able to bear negative shocks.”

economy

Joseph S. Vavra: Will the COVID-19 crisis exacerbate inequality?

 

“There is no reason to give handouts to people who don’t need them.”

policy

Capitalisn’t: Coronavirus—the winners and losers in the stimulus bill

 

“Credit support makes a lot of sense for businesses. Bailing out shareholders makes less sense.”

policy

Steven J. Davis: Should the US bail out airlines?

 

“How many types of intangible capital are being destroyed and are going to have to be rebuilt?”

economy

Chad Syverson: How quickly will the US economy recover?

 

“Constraints are beneficial, and can accelerate rather than inhibit innovation.”

business

Four ways to ensure innovation continues after the crisis

 

“If I put saving a large number of people as a priority, I think that we can pay an economic cost for that.”

policy

Capitalisn’t: Coronavirus—a cost-benefit analysis of the economic shutdown

 

“Containment doesn’t mean complete elimination.”

policy | health care

How does economic policy interact with public health measures for COVID-19?

 

“Firms’ uncertainty about their own sales growth rates rose 44 percent from February to March.”

business

US companies are bracing for a big blow from COVID-19

 

“The current situation is unprecedented, and it’s developing rapidly.”

markets

How the coronavirus affects stock prices and growth expectations

 

“When it comes to COVID-19, the conventional economic trade-offs are greatly overstated.”

policy

Don’t fall for the false trade-offs of COVID-19 policy

 

“People are the important thing, money is cheap, and this medical shock is transient.”

economy | policy

To treat COVID-19’s economic impact, start by keeping the lights on

 

“Just like in 2007-08, Europe is out for lunch when it matters. The one viable actor in times of crisis is the nation state.”

economy

Will there be a coronavirus recession?

 

“The economic shock from this crisis is going to be huge, with an enormous human cost.”

policy

Three pillars of the economic policy response to the COVID-19 crisis

 

“We see the fragility of markets in a situation of panic.”

economy

Capitalisn’t: The Capitalisn’t of coronavirus

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