Clark Center Forum

Maryam Farboodi, Gregor Jarosch, Robert Shimer Analysis of a conventional dynamic economic model integrating individual optimization, equilibrium interactions, and policy analysis into the canonical epidemiological model highlights three key features of the optimal policy in a pandemic: it imposes immediate, discontinuous social distancing; it keeps social distancing in place for a long time or until […] 

Current institutional arrangements mean that small firms will be able to renegotiate with creditors and landlords to avoid bankruptcy during the lockdown. A program that allows small businesses to skip rent and utilities during the lockdown, but repay them slowly over time afterwards, would be a net benefit to the economy. Read more> 

This week’s IGM Economic Experts Panel statements:

A) Current institutional arrangements mean that small firms will be able to renegotiate with creditors and landlords to avoid bankruptcy during the lockdown.

B) A program that allows small businesses to skip rent and utilities during the lockdown, but repay them slowly over time afterwards, would be a net benefit to the economy. 

Jason Abaluck and Judith A. Chevalier A team of Yale researchers looked at the evidence for whether ordinary people should wear masks to slow transmission of COVID-19. Their verdict: Yes, we should all be wearing cloth masks, but give the surgical masks to healthcare workers. Two of the co-authors explain the reasoning behind this recommendation. […] 

Olivier Blanchard Is there deflation or inflation in our future? Some observers point to falling commodity prices, stumbling oil prices, and a depressed labor market and see low inflation, perhaps even deflation as far as forecasts go. Others point to the very large increases in fiscal deficits and central bank balance sheets and see inflation, […] 

Government support to private firms in the form of debt (either directly or with the help of public guarantees) is desirable, but risks leaving them with too much leverage to invest and grow in the future. Providing funds to viable businesses in the form of equity injections is a vital complement to debt support. With […] 

The balance of federal and local government support to address the economic impact of the crisis has thus far been tilted too much towards supporting firms rather than individuals. Government provision of financial support to firms to keep workers on payroll for the duration of the lockdown will make the recovery faster than if the […] 

This week’s IGM European Economic Experts Panel statements:

Government support to private firms in the form of debt (either directly or with the help of public guarantees) is desirable, but risks leaving them with too much leverage to invest and grow in the future.

Providing funds to viable businesses in the form of equity injections is a vital complement to debt support.

With the EU ban on state aid suspended, government capital injections should be provided via a newly created pan-European equity fund, rather than be left to national governments acting independently. 

Marianne Bertrand, Guglielmo Briscese, Maddalena Grignani, and Salma Nassar This report describes survey results of how a sample of 1400 Americans say are coping with the physical distancing measures, and how this unprecedented crisis might be changing their views about the economy, politics, the role of government, and the future of their country. Read more> 

This week’s IGM Economic Experts Panel statements:

The balance of federal and local government support to address the economic impact of the crisis has thus far been tilted too much towards supporting firms rather than individuals.

Government provision of financial support to firms to keep workers on payroll for the duration of the lockdown will make the recovery faster than if the only recourse for workers to replace income were unemployment insurance.