The expenditure necessary to avoid the Covid-19 health crisis turning into a long-lasting deep recession is enormous. Should it be financed through new debt, or monetization? Axelle Arquié, Jérôme Héricourt and Fabien Tripier ask if it’s time to return to money printing.
The advantages of corona bonds over the ESM are meagre to non-existent, says Friedrich Heinemann (EconPol Europe, ZEW). The challenge we face is to contain the spread of COVID-19 while stabilizing the economy and the ESM is up to the job.
After Covid-19, the world will need a lifeline – but which one? We surveyed 1000 economic experts in 110 countries on the economic effects of the COVID-19 pandemic and the effectiveness of different policy measures to combat the crisis for different countries.
Coronavirus could cost the German economy up to 729 billion, with up to 1.8 million jobs cut and six million workers affected by lower hours, according to a policy brief from Clemens Fuest and co-authors from the ifo Institute.
Also from António Afonso, with co-authors Maria João Guedes and Pankaj C. Patel: the Portuguese government revoked four holidays for public sector and private employees in the aftermath of the global financial crisis. This policy seems to have served a ceremonial purpose,
but not an economic one.
Wage smoothing is beneficial for firms and workers, but wage rigidities can lead to bilaterally inefficient separations. Martin Kerndler and Michael Reiter analyze the best policy mix to counter the negative employment effects of wage rigidities.
With the multitude of economic risks associated with COVID-19 and the increasingly plausible steep protraction, Bo Becker, Ulrich Hege and Pierre Mella-Barral ask what mitigating support programs are governments putting into place for households and firms?
In the current context of difficult times across the world, there are relevant issues on which many people might agree, regardless of their political, ideological or theoretical views. António Afonso examines the options available and asks for compromise.
The second CESifo-EconPol Europe Workshop, on Public Policy Evaluation and Optimal Policy Design, will be held in Munich on 15-16 October. Researchers are invited to submit proposals before 15 July. Call for papers and more information.
Published: ifo Institute for Economic Research at the University of Munich,
Editor: Juliet Shaw.
The reprint of excerpts from this newsletter is permitted only with written permission and provided that the source is acknowledged.
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