Tag Archives: Contributions

FAS, 31 May 2020. PDF. Monetary deficit financing is the norm—after all, central banks distribute their profits. Monetary financing occurs in the context of regular open market operations and QE and, hyper charged, with helicopter drops. The question is not whether monetary policy should finance the government, but why it does so, and to what extent. Fiscal and monetary policy are inherently connected; what constitutes monetary policy is defined by objectives.

CEPR Discussion Paper 14791, May 2020, with Martin Gonzalez-Eiras. PDF (local copy). We contrast the canonical epidemiological SIR model due to Kermack and McKendrick (1927) with more tractable alternatives that offer similar degrees of “realism” and flexibility. We provide results connecting the different models which can be exploited for calibration purposes. We use the expected spread of COVID-19 in the United States to exemplify our results.

On VoxEU, Refet Gürkaynak and Deborah Lucas argue in favor of helicopter drops to finance the fiscal burden due to Covid-19 and they propose an elegant way to implement such drops without undermining the central bank’s equity position (if regulators accept accounting tricks). The special issue bonds would be zero coupon perpetuities and therefore would not obligate Treasury to any future payments. The legislation would require the Fed to buy these bonds from the banks at par. The...

Covid Economics, April 2020, with Martin Gonzalez-Eiras. PDF. We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently experienced by the...

Promising to do “whatever it takes” in order to avert a bad equilibrium is very different from printing money when the problem is a lack of resources, or their distribution. See Gilles Saint-Paul’s “Whatever it Takes.”

Valor, 14 April 2020. PDF. Short interview on the implications of the Covid-19 shock for businesses, pensions, government finances, and asset markets. Longer online interview and video.

CEPR Discussion Paper 14612, April 2020, with Martin Gonzalez-Eiras. PDF (local copy). We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as...

CEPR Discussion Paper 14612, April 2020, with Martin Gonzalez-Eiras. PDF (local copy). We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as...

In Die Mittelländische Zeitung, a Swiss doctor criticizes Switzerland’s preparations and response to Covid-19. He points to Lack of preparation by political decision makers Misleading communication by federal health officials Their apparent lack of awareness of academic work on the topic Arrogance in Switzerland and the West vis-à-vis China and other far eastern countries Sensationalist scare mongering in the media Calls for systematic infection of groups that are less at risk Informative...

Data from April 6, 2020. Iceland and Luxembourg have many more confirmed cases per capita than other countries (either because they have more cases or better information). Mortality per confirmed case is highest in Italy, Spain, France, Belgium, Netherlands, UK. Source: Author’s calculations based on Johns Hopkins data and World Bank data.