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This paper by Guerrieri et al is impressively fast work, similar in spirit to what I& #39;ve been thinking but going much further while also crossing the eyes and dotting the teas 1/ https://economics.mit.edu/files/19351 ">https://economics.mit.edu/files/193...
My informal discussion here. We have a direct hit to "contact-intensive" sectors, and a second-round Keynesian demand-side hit to the rest of the economy 2/ https://www.nytimes.com/2020/04/01/opinion/notes-on-the-coronacoma-wonkish.html">https://www.nytimes.com/2020/04/0...
They suggest that there may be lasting negative effects, even as the pandemic fades, because of balance-sheet damage; they suggest, going beyond where I was, that there may be adverse effects on the economy& #39;s potential 3/
One thing they don& #39;t mention, but I think is very serious, is the fiscal impact on state and local governments, which face balanced-budget requirements and will be forced into destructive austerity, delaying recovery, unless they get federal aid 4/
A self-indulgent note: Although our situation is horrible, intellectually I love the kind of thing they& #39;re doing: using the tools of economics to make sense of an unprecedented situation. 5/
And actually more than self-indulgence involved. People who rely on rote repetition of slogans based on different situations — like those still worried about disincentives for work — are completely lost now. In times like these, only the creative survive (intellectually) 6/
Werning has a very good thread explaining what& #39;s going on in their work 7/ https://twitter.com/IvanWerning/status/1246043601454403585">https://twitter.com/IvanWerni...
