The COVID‐19 Economic Crisis

Cambridge Journal of Regions, Economy and Society

This paper explores the local impact of various forms of fiscal and monetary support for UK-based companies in the context of disruption caused by COVID-19 and associated public health restrictions, including support for household incomes (and therefore private consumption) via the ‘furlough’ scheme, the Covid Corporate Financing Facility and various national and local business support schemes. It shows that the economic crisis associated with the pandemic has been construed to justify interventions that preserve the spatially uneven status quo of the UK’s model of economic development, protecting business from harms arising, apparently, from the public’s reaction to the pandemic. To some extent, COVID-19 has been treated as a localised phenomenon that the national economy requires protection from.

The Georgia Journal of International and Comparative Law, 2021

EUROPEAN RESEARCH STUDIES JOURNAL, 2020

Purpose: The aim of the article is to show the direction and size of public aid intended to relieve the effects of the pandemic in Poland. Design/Methodology/Approach: Based on the macroeconomic indicators, the authors present economic effects of the pandemic in order to justify the purposefulness of the granted public aid, and describe its direction and scope at EU level and in relation to Poland. The final part of the study comprises an analysis of the potential outcome of public aid and recommendations regarding future activity. Findings: The article shows the role and importance of public aid in relieving the effects of economic crises. The authors point out the impact of public aid on the behaviour of enterprises and private households, as well as on the overall condition of public finances. Practical Implications: Public aid in Poland has been directed both to businesses and to households in order to counteract the negative effects of the pandemic. The authors show that despite the undertaken steps, during the period under study the rate of cuts both for enterprises and private households was growing, while for companies the rate of investment was decreasing. In addition, the state revenue generated from taxation decreased, whereas budget expenditure went up. These dependencies constitute an important implication for decision-makers in relation to the size and form of public aid, both already granted and planned in the future. Originality/value: The economic crisis caused by the current pandemic is unprecedented in terms of its reasons as well as the pace and effects of its spreading. This study fills a gap in the subject literature by showing the mechanism of the crisis, the value and scope of public aid employed to relieve its effects, and also the impact of the undertaken initiatives on the behaviour of businesses and households.

This note discusses short-term policy options for managing the employment impacts of the COVID-19 crisis. The note pays attention to the labor market and institutional context of most low and middle-income countries where informality is large and where existing institutions often lack mechanisms to effectively reach businesses and workers in the informal sector. The note covers complementary policies aimed at: 1) Helping businesses survive and retain workers; 2) providing protection for those who do lose their jobs and see their livelihoods significantly affected; and 3) facilitating alternative employment and employability support for those who are out of work (ALMP). The main message is that countries need to support the spending capacity of households who lose income while at the same time supporting firms to keep paying their workers and to start up production again after the crisis passes without a huge raft of debt that makes them insolvent, illiquid or both. If countries fail to do this, there are likely to be large secondary demand effects that reinforce the problem through the common multipliers. The Nature of the Crisis The COVID-19 crisis is not only a health crisis, but also an economic and employment one. Although it is early, impacts are starting to be seen in official statistics. Labor market prospects appear to be worsening rapidly, and expected impacts are large. The ILO estimates a significant rise in unemployment and underemployment as a result of the crisis. Preliminary ILO estimates point to a rise in global unemployment of between 5.3 million ("low" scenario) and 24.7 million ("high" scenario) from a base level of 188 million in 2019. For comparison, the global financial crisis of 2008-9 increased unemployment by 22 million. 2 However, this might turn out to be an underestimate. Private sector analysts are already predicting much greater output and employment shocks in the absence of powerful policy responses (e.g. Goldman Sachs). A crisis that started as a supply-side shock for labor markets has rapidly evolved into a joint supply and demand crisis. Due to health concerns, illness, travel bans, quarantine measures and other mobility constraints, many workers cannot get to work; when they do work, productivity-and with that, often incomes, are affected. In terms of labor demand, global and local supply chains have been disrupted; across many countries, businesses have been closed or remain open only limited hours; even when operating, lower consumer demand affects earnings. The ongoing crisis, and the uncertainty surrounding its duration and impacts, create an environment where investments and new hiring are deterred. Permanent business closures, rising unemployment and loss of livelihoods are big concerns.

Social Policy & Administration, 2021

How have welfare states responded to the coronavirus pandemic? In this introductory article, we provide a synopsis of papers that comprise this special issue on social policy responses to COVID-19, an overview of some of the key questions they raise, and some provisional answers to these questions. Our conclusions are threefold: first, these social policy responses, while entailing new developments in many countries, nonetheless reflect, at least in part, existing national policy legacies. Second, these responses can be understood as a form of "emergency Keynesianism," which is characterized by the massive use of deficit spending during economic crises, with the aim of to supporting rather than challenging core capitalist institutions. Third, there are clear differences in terms of the nature of the reforms enacted during the initial phase of the COVID-19 crisis as compared to reforms enacted as a response to the 2008 financial crisis.

Innocenti Working Papers

A rapid review of economic policy and social protection responses to health and economic crises and their effects on children Lessons for the COVID-19 pandemic response

KSP Books, Editor: Vlados Charis & Fakhry Bachar, ISBN: 9786257501224, Dec 1, 2021 , 2021

A repositioning of the theoretical instruments of development and growth in the context of economics and political economy that we have at our disposal to date seems necessary, especially after the structural transformation caused by the COVID-19 socio-economic and pandemic crisis. Specifically, the overcoming of the COVID-19 era of crisis seems to depend on how we will manage to re-perceive the theory of economic development and apply its proposals in new economic policies, in global terms. In this context, this article examines whether the conceptual and “therapeutic” foundations of development economics have today the necessary potential to cope with structural changes caused by the ongoing global socio-economic crisis. We assess the current debate in the literature of “economic development versus economic growth” and conclude that a new, comprehensive and evolutionary, orientation to understanding economic development seems necessary to respond to new global challenges for the post-COVID-19 era. We propose a multidisciplinary and evolutionary conceptual direction that suggests the multi-angle understanding of diverse historical configurations. We argue that all socio-economic mutations accelerated by the current pandemic crisis have systemic and evolutionary content and effects and cannot be reliably perceived as mere coincidences of “quantities” and growth “performances.” In this way, we can only disagree with any static and linear approach to the current crisis that directly or indirectly leads to reproducing the rigid enclosure of the analysis in partial specializations of economics. On the contrary, we counter-propose a theoretical response of evolutionary type to assess the contemporary theory of economic development and the political economy in the post-COVID-19 era as an interdisciplinary crossroads for all socio-economic sciences. The Covid-19 pandemic raised a few issues concerning how market participants react to a global pandemic. The pandemic was a black swan event on some levels; there had been few pandemics that have had such a global impact: the Spanish Flu of the late 1910s and 1957 influenza. Moreover, global interconnection means that the Covid-19 pandemic was able to spread across the globe quickly, thus indicating that extreme measures were needed to bring it under control. The policies taken by governments around the world had a significant adverse impact on the economy. It is with these factors in mind that we research the psychology of the market participants during the pandemic. Conversely, we introduce a new model of behaviour during uncertainty, which explains how market participants react during crises such as the Covid-19 pandemic. The model analyses the psychological issues, both emotional and cognitive, influencing the pandemic. We found that like any other crises, market participant reacted to government actions and announcements and the impact on the economy. Therefore, leading to the old issue of miscommunication and insufficient actions. The New Zealand economy is in a parlous state and not simply because of the economic fall-out associated with the pandemic. For decades now, New Zealand has been falling further and further behind its OECD partners, with institutional inefficiencies, poor policy making and the almost willful refusal of successive governments to admit to (let alone confront) mounting economic problems, all combining to place us on the edge of a deep, and lasting, economic downturn. Across a broad plethora of areas and key economic indicators, New Zealand lags behind almost every other advanced country against which it has traditionally measured itself. These areas include the three pillars of social wellbeing (education, health, and social welfare), housing, tax, productivity and debt. In every case, we are either falling behind outcomes achieved in other countries (education, health, productivity), entrenching inequality through our failure to cater for the needs of our most vulnerable (housing, health, education, social welfare, tax), or failing to prepare adequately for looming economic and social costs – including those incurred by a rapidly aging population. If ignored, these problems will precipitate a crisis that may make the burden of recovering from Covid-19 pale by comparison (superannuation, health, debt). In its much anticipated post-Covid budget, the Labour Government needs to not only provide a clear blueprint for helping those who have been adversely affected by the pandemic and New Zealand’s subsequent lockdown, but also signal its intention to tackle the systemic weaknesses which have placed our economy at such risk, and which threaten to consign our future generations to unwelcome, and unnecessary, economic and social hardship. In economics, the problematics of development and underdevelopment is a field of conceptual controversies and constant “re-comprehension,” already since classical economists’ fundamental explorations. Nowadays, especially within the particularly pressing conditions caused by the global pandemic of COVID-19, it seems that this field of research and scientific knowledge must be profoundly re-fertilized in analytical and explanatory terms. The current crisis seems to function as a catalyst for various structural changes globally, leading to a necessary theoretical reorientation of the related thematics towards exploring the inner evolutionary “mechanisms” that will drive socio-economic development (and underdevelopment) in the future. This article aims to study the conceptual evolution of the notions of development and underdevelopment in the light of modern evolutionary economics, which we think could offer a foundational repositioning at the interpretative level in response to the new emerging conditions. More specifically, this article tries to respond to what development and underdevelopment mean over time, where analytical readjustments the evolutionary economics lead to nowadays, and whether it is possible to counter-propose a multilevel approach that enriches the theoretical background for an interdisciplinary and unifying understanding of the specific problematics at the dawn of the new global reality that appears in the post-COVID-19 era. At first, we look at essential development and underdevelopment concepts by critically exploring corresponding basic definitions throughout time. Next, we study the essential and associated elements of evolutionary economics, in the light of the problematics of development and underdevelopment of our days, intending to reach a synthesizing theoretical perspective. We counter-propose the “development web” approach and analysis as a useful repositioned perspective on addressing the developmental/underdevelopmental problem since the compartmentalization of social sciences between the “micro, meso and macro” approaches seems progressively inadequate and sterile. The COVID-19 pandemic gave minimal reaction time to governments around the world. While causing millions of deaths, it was also detrimental to the global economy. This paper is an attempt to understand what we can learn from our experience with the virus, with a focus on the United States. I discuss good and bad U.S. policies and the overall performance of institutions involved in pandemic response. The approach is economical because it connects what happened with some key economic principles. I talk about how markets helped us generate most of the knowledge we have on the virus, and I explain how existing regulations slowed down the production and distribution of essential items in the fight against Covid. Given the scarce nature of public attention, I also discuss the lack of consistent public messaging for the pandemic in the United States.

2020

09 Great Recession and produced positive financial and family results, especially for children in financially vulnerable and produced positive financial and family results, especially for children in financially vulnerable households. Likewise, CDAs can be expected to have positive impacts during and after the COVID-19 crisis. households. Likewise, CDAs can be expected to have positive impacts during and after the COVID-19 crisis. As the COVID-19 pandemic ravages the U.S. and global economies, another recession has arrived, As the COVID-19 pandemic ravages the U.S. and global economies, another recession has arrived, and it may be severe. Economic downturns disproportionately affect financially vulnerable families. and it may be severe. Economic downturns disproportionately affect financially vulnerable families. The coronavirus crisis makes matters even worse, because many financially vulnerable workers The coronavirus crisis makes matters even worse, because many financially vulnerable workers have jobs that are impossible to do from home. As a result, millions of already struggling Americans have jobs that are impossible to do from home. As a result, millions of already struggling Americans are losing their jobs, as evidenced by the staggering surge in unemployment claims and the overall are losing their jobs, as evidenced by the staggering surge in unemployment claims and the overall unemployment rate. unemployment rate. 1 1 The total number of unemployed Americans is estimated to peak as high as forty- The total number of unemployed Americans is estimated to peak as high as fortyseven million, which would be 32% unemployment. seven million, which would be 32% unemployment. 2 2 These numbers at best represent an economic These numbers at best represent an economic and social crisis, and at worst a potential depression. and social crisis, and at worst a potential depression. To ease the crisis, Congress has responded with cash payments to households, extended To ease the crisis, Congress has responded with cash payments to households, extended unemployment benefits, and loans for small businesses. These time-limited supports are designed unemployment benefits, and loans for small businesses. These time-limited supports are designed to keep up aggregate demand and hold down unemployment, and this is a good start. However, to keep up aggregate demand and hold down unemployment, and this is a good start. However, COVID-19 conditions are destroying businesses and employment that will not readily recover. Family COVID-19 conditions are destroying businesses and employment that will not readily recover. Family hardships as a result of COVID-19 will endure long after the virus is less threatening. hardships as a result of COVID-19 will endure long after the virus is less threatening. These lasting hardships raise a fundamental question: Why does social policy in the United States not These lasting hardships raise a fundamental question: Why does social policy in the United States not enable more families to become financially stable and secure? U.S. social policy for the poor focuses enable more families to become financially stable and secure? U.S. social policy for the poor focuses almost exclusively on supporting income for short-term consumption, and not enough on building almost exclusively on supporting income for short-term consumption, and not enough on building assets for long-term stability and family development. assets for long-term stability and family development. 3 3 In the absence of asset-building policies, In the absence of asset-building policies, millions of families facing the financial consequences of COVID-19 have no resources to buffer negative millions of families facing the financial consequences of COVID-19 have no resources to buffer negative economic shocks. economic shocks. During this period of massive federal policy action, with trillions of dollars being spent, there is an During this period of massive federal policy action, with trillions of dollars being spent, there is an opportunity to rethink the major purposes of social policy, and to turn more policy toward asset opportunity to rethink the major purposes of social policy, and to turn more policy toward asset building for all Americans. From this perspective, social policy can and should become not just an building for all Americans. From this perspective, social policy can and should become not just an expenditure for survival, but also a expenditure for survival, but also a social investment social investment for security and development. for security and development. 4 4

SSRN Electronic Journal, 2021

Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.