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All COVID-19 publications

Pandemics and aggregate demand: A framework for policy analysis

Author(s): Flaschel P, Galanis G, Tavani D, Veneziani R
Date of publication: 2021
Publication type: Workshop report

This paper studies the interaction between epidemiological dynamics and the dynamics of economic activity in a demand-driven model in the structuralist/post-Keynesian tradition. On the one hand, rising aggregate demand increases the contact rate and therefore the probability of exposure to a virus...

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Redistribution and the monetary–fiscal policy mix

Author(s): Bhattarai S, Lee JW, Yang C
Date of publication: 2020
Publication type: Working paper

We show that the effectiveness of redistribution policy in stimulating the economy and improving welfare is directly tied to how much inflation it generates, which in turn hinges on monetary-fiscal adjustments that ultimately finance the transfers. We compare two distinct types of monetary-fiscal...

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Be kind or take it on the chin? Political narratives, pandemics, and social distancing

Author(s): Anand K, Gai P, Lou E, Wu SX
Date of publication: 2020
Publication type: Working paper

How does a political leader’s messaging during a pandemic influence social distancing by citizens? We model the strategic choice of narrative in a beauty contest setting where the leader seeks to eliminate the disease. The leader’s resolve to eliminate the disease affects her narrative in a non-...

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A counterfactual economic analysis of Covid-19 using a threshold augmented multi-country model

Author(s): Chudik A, Mohaddes K, Pesaran MH, Raissi M, Rebucci A
Date of publication: 2020
Publication type: Working paper

This paper develops a threshold-augmented dynamic multi-country model (TGVAR) to quantify the macroeconomic effects of Covid-19. We show that there exist threshold effects in the relationship between output growth and excess global volatility at individual country levels in a significant majority...

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Implications of cheap oil for emerging markets

Author(s): Kabundi A, Ohnsorge F
Date of publication: 2020
Publication type: Working paper

The COVID-19-triggered collapse in oil prices in March and April 2020 was the seventh, and by far the most severe, in a series of such collapses since 1970. This paper, first, compares this most recent collapse and its drivers with previous ones in an event study. It finds that it was associated...

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Uncertainty and monetary policy during extreme events

Author(s): Pellegrino G, Castelnuovo E, Caggiano G
Date of publication: 2020
Publication type: Working paper

How damaging are uncertainty shocks during extreme events such as the great recession and the Covid-19 outbreak? Can monetary policy limit output losses in such situations? We use a nonlinear VAR framework to document the large response of real activity to a financial uncertainty shock during the...

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Nowcasting the output gap

Author(s): Berger T, Morley J, Wong B
Date of publication: 2020
Publication type: Working paper

We propose a way to directly nowcast the output gap using the Beveridge-Nelson decomposition based on a mixed-frequency Bayesian VAR. The mixed-frequency approach produces similar but more timely estimates of the U.S. output gap compared to those based on a quarterly model, the CBO measure of...

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Global macroeconomic cooperation in response to the COVID-19 pandemic: a roadmap for the G20 and the IMF

Author(s): McKibbin W, Vines D
Date of publication: 2020
Publication type: Working paper

The COVID-19 crisis has caused the greatest collapse in global economic activity since 1720. Some advanced countries have mounted a massive fiscal response, both to pay for disease-fighting action and to preserve the incomes of firms and workers until the economic recovery is under way. But there...

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Financial uncertainty and real activity: The good, the bad, and the ugly

Author(s): Caggiano G, Castelnuovo E, Kima R, Delrio S
Date of publication: 2020
Publication type: Working paper

This paper quantifies the finance uncertainty multiplier (i.e., the magnifying effect of the real impact of uncertainty shocks due to financial frictions) by relying on two historical events related to the US economy, i.e., the large jump in financial uncertainty occurred in October 1987 (which was...

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Nowcasting unemployment insurance claims in the time of COVID-19

Author(s): Larson WD, Sinclair TM
Date of publication: 2020
Publication type: Working paper

Near term forecasts, also called nowcasts, are most challenging but also most important when the economy experiences an abrupt change. In this paper, we explore the performance of models with different information sets and data structures in order to best nowcast US initial unemployment claims in...

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