Checking the path towards recovery from the COVID-19 response

Crawford School of Public Policy | Centre for Applied Macroeconomic Analysis

Event details

Seminar

Date & time

Thursday 09 July 2020
9.00am–10.00am

Venue

Online via Zoom

Speaker

Enrique Martinez-Garcia, Federal Reserve Bank of Dallas

Contacts

Rossana Bastos Pinto

The paper presented in this seminar examines the impact of the behavioral changes and governments’ responses to the spread of the COVID-19 pandemic using a unique dataset of daily private forecasters’ expectations on a sample of 32 emerging and advanced economies from January 1 until April 13, 2020. Enrique Martinez-Garcia documents three important lessons from the data: First, there is evidence of a relation between the stringency of the policy interventions and the health outcomes consistent with slowing down the spread of the pandemic. Second, the author finds robust evidence that private forecasters have come to anticipate a sizeable contraction in economic activity followed by a check mark recovery as a result of the governments’ increasingly stringent response. The evidence suggests also that workplace restrictions have further contributed to the downturn and to the subsequent sluggish recovery—opening up the question about the costs of tighter work restrictions. Finally, the author argues inflation expectations have not changed significantly so far. Through the lens of the neoclassical growth model, these changes in macro expectations can result from the resulting work disruptions and the potential productivity slowdown from the gradual de-escalation of the confinement.

Updated:  5 July 2020/Responsible Officer:  Crawford Engagement/Page Contact:  CAMA admin