Question A:
Current institutional arrangements mean that small firms will be able to renegotiate with creditors and landlords to avoid bankruptcy during the lockdown.
Responses
© 2025. Kent A. Clark Center for Global Markets.
5%
2%
2%
36%
45%
9%
0%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
3%
45%
44%
8%
0%
Question 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.
Responses
© 2025. Kent A. Clark Center for Global Markets.
5%
0%
2%
2%
32%
50%
9%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
3%
4%
29%
50%
14%
Question A Participant Responses
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
---|---|---|---|---|
![]() Daron Acemoglu |
MIT | Bio/Vote History | ||
Renegotiation is hard at the best of times. Casual evidence suggests it hasn't worked out well with banks in many cases so far.
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![]() Alberto Alesina |
Harvard | Bio/Vote History | ||
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![]() Joseph Altonji |
Yale | Bio/Vote History | ||
It will be in the interest of many creditors to renegotiate, and some will. But I don't know how widespread this will be.
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![]() Alan Auerbach |
Berkeley | Bio/Vote History | ||
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![]() David Autor |
MIT | Bio/Vote History | ||
That's the intention! Remains to be seen how well it works...
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![]() Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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![]() Abhijit Banerjee |
MIT | Bio/Vote History | ||
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![]() Marianne Bertrand |
Chicago | Bio/Vote History | ||
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![]() Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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![]() Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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![]() Judith Chevalier |
Yale | Bio/Vote History | ||
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![]() David Cutler |
Harvard | Bio/Vote History | ||
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![]() Angus Deaton |
Princeton | Bio/Vote History | ||
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![]() Darrell Duffie |
Stanford | Bio/Vote History | ||
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![]() Aaron Edlin |
Berkeley | Bio/Vote History | ||
The question is the extent. Sure there will be plenty of renegotiation. But how efficient? And at what cost?
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![]() Barry Eichengreen |
Berkeley | Bio/Vote History | ||
Some small firms anyway. Friends in the small-firm space tell me that they renegotiate contracts all the time (anecdotal economics I know).
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![]() Liran Einav |
Stanford | Bio/Vote History | ||
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![]() Ray Fair |
Yale | Bio/Vote History | ||
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![]() Amy Finkelstein |
MIT | Bio/Vote History | ||
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![]() Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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![]() Austan Goolsbee |
Chicago | Bio/Vote History | ||
Let’s hope.
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![]() Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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![]() Oliver Hart |
Harvard | Bio/Vote History | ||
I would say should rather than will. They should also be encouraged to do so.
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![]() Bengt Holmström |
MIT | Bio/Vote History | ||
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![]() Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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![]() Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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![]() Kenneth Judd |
Stanford | Bio/Vote History | ||
Renegotiation is possible in theory but there is not enough time for the huge number of changes necessary to avoid inefficient bankruptcies.
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![]() Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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![]() Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
huge frictions, plus the b'rutpcy courts could be overwhelmed. Greenwood & Thesmar identify a real problem. Not sure about their solution
-see background information here |
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![]() Pete Klenow |
Stanford | Bio/Vote History | ||
The holdout problem?
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![]() Jonathan Levin |
Stanford | Bio/Vote History | ||
Many may be able to do so, especially with a scarcity of alternative tenants, but this is uncharted territory.
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![]() Eric Maskin |
Harvard | Bio/Vote History | ||
Small firms may try to re-negotiate their way out of bankruptcy, but it's not clear how successful this will be.
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![]() William Nordhaus |
Yale | Bio/Vote History | ||
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![]() Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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![]() Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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![]() Larry Samuelson |
Yale | Bio/Vote History | ||
One hopes this will be the case, but the result is yet to be seen.
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![]() José Scheinkman |
Columbia University | Bio/Vote History | ||
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![]() Richard Schmalensee |
MIT | Bio/Vote History | ||
Landlords and suppliers to small firms are often small firms themselves; not all have regular banking relationships.
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![]() Carl Shapiro |
Berkeley | Bio/Vote History | ||
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![]() Robert Shimer |
University of Chicago | Bio/Vote History | ||
Anecdotally, some firms have been able to renegotiate. It is unclear how many will be able to
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![]() James Stock |
Harvard | Bio/Vote History | ||
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![]() Richard Thaler |
Chicago Booth | Bio/Vote History | ||
The default options are all bad for those with liquidity constraints. Cutting some slack is both humane and ma well be long-run maximizing.
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![]() Christopher Udry |
Northwestern | Bio/Vote History | ||
There is substantial uncertainty about how lenders and landlords will deal with obligations of small businesses.
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Question B Participant Responses
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
---|---|---|---|---|
![]() Daron Acemoglu |
MIT | Bio/Vote History | ||
Caveat: perhaps some allowance when landlord is a small business or an individual.
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||||
![]() Alberto Alesina |
Harvard | Bio/Vote History | ||
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![]() Joseph Altonji |
Yale | Bio/Vote History | ||
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||||
![]() Alan Auerbach |
Berkeley | Bio/Vote History | ||
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![]() David Autor |
MIT | Bio/Vote History | ||
Simply allowing non-payment would do damage. Requiring immediate payment would do damage. This is a half-way house.
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![]() Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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![]() Abhijit Banerjee |
MIT | Bio/Vote History | ||
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||||
![]() Marianne Bertrand |
Chicago | Bio/Vote History | ||
|
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![]() Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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![]() Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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![]() Judith Chevalier |
Yale | Bio/Vote History | ||
I don't think it is obvious that, say, landlords are always better able to provide financing than tenants.
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![]() David Cutler |
Harvard | Bio/Vote History | ||
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![]() Angus Deaton |
Princeton | Bio/Vote History | ||
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![]() Darrell Duffie |
Stanford | Bio/Vote History | ||
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![]() Aaron Edlin |
Berkeley | Bio/Vote History | ||
Possibly. It is a mess. Should the rule be that rent is forgiven or accrues at 60 percent, or 80 percent, or 100 percent on the dollar?
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![]() Barry Eichengreen |
Berkeley | Bio/Vote History | ||
Since moral hazard is not an issue. Consequences for landlords and utility companies would have to be addressed, of course.
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||||
![]() Liran Einav |
Stanford | Bio/Vote History | ||
|
||||
![]() Ray Fair |
Yale | Bio/Vote History | ||
|
||||
![]() Amy Finkelstein |
MIT | Bio/Vote History | ||
|
||||
![]() Pinelopi Goldberg |
Yale | Bio/Vote History | ||
|
||||
![]() Austan Goolsbee |
Chicago | Bio/Vote History | ||
As long as we get control of the virus. If this thing lasts, extensions won’t work
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![]() Michael Greenstone |
University of Chicago | Bio/Vote History | ||
i don't understand whether the government is involved and might step in with this scenario. too many moving parts to judge
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Robert Hall |
Stanford | Bio/Vote History | ||
We have so much trouble defining a small business that the benefits would be unfocused.
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![]() Oliver Hart |
Harvard | Bio/Vote History | ||
There is something to be said for such a program but some people rely on rent for their income, and it would be bad for them.
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||||
![]() Bengt Holmström |
MIT | Bio/Vote History | ||
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||||
![]() Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
|
||||
![]() Hilary Hoynes |
Berkeley | Bio/Vote History | ||
|
||||
![]() Kenneth Judd |
Stanford | Bio/Vote History | ||
US government pays ~0% interest. Many businesses are sound but need time to recover. Many fewer will fail with this policy.
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![]() Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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![]() Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
depends how long the lockdown lasts, the people not getting paid matter too, and targeting will be hard. details on design really matter
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||||
![]() Pete Klenow |
Stanford | Bio/Vote History | ||
![]() Jonathan Levin |
Stanford | Bio/Vote History | ||
Might be effective, but it is very hard to anticipate the full effects of this sort of policy.
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![]() Eric Maskin |
Harvard | Bio/Vote History | ||
If these firms go under, the economy will be dealt a serious blow. Better to try to keep them going until the economy opens up
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||||
![]() William Nordhaus |
Yale | Bio/Vote History | ||
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![]() Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
Depends on position of those to whom they owe money, and if they have alternative resources.
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![]() Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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![]() Larry Samuelson |
Yale | Bio/Vote History | ||
This would help keep firms, workers and productive capabilities intact, which will be important in the recovery.
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![]() José Scheinkman |
Columbia University | Bio/Vote History | ||
Small businesses need help but no reason to tax only utilities or landlords to finance this subsidy. Also payment chains are complex.
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![]() Richard Schmalensee |
MIT | Bio/Vote History | ||
Utilities can generally wait; less clear that most landlords can.
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![]() Carl Shapiro |
Berkeley | Bio/Vote History | ||
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![]() Robert Shimer |
University of Chicago | Bio/Vote History | ||
There is risk to the commercial mortgage market from this, but it already faces a difficult period
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![]() James Stock |
Harvard | Bio/Vote History | ||
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||||
![]() Richard Thaler |
Chicago Booth | Bio/Vote History | ||
Make flexibility the default.
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||||
![]() Christopher Udry |
Northwestern | Bio/Vote History | ||
There will, however, be difficult issues in designing a program like this.
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