Addendum, A new paper by Chang Ma, John H. Rogers and Sili Zhou:
We provide perspective on the possible global economic and financial effects from COVID-19 by examining the handful of similar major health crises in the 21st century. We estimate the effects of these disease shock episodes on GDP growth, fiscal policy, expectations, financial markets, and corporate activity. Simple time-series models of GDP growth indicate that real GDP is 2.57 % lower on average across 210 countries in the year of the official declaration of the outbreak and is still 2.96 % below its pre-shock level five years later. The negative effect on GDP is felt less in countries with more aggressive first-year responses in government spending. Consensus forecast data suggests a pessimistic view on real GDP initially that lasts for two months, an effect that is larger for emerging market economies. Stock market responses indicate an immediate negative reaction. Finally, using firm-level data, we find a fall in corporate profitability and employment, and an increase in debt, the last of which is further reflected in higher sovereign CDS spreads.
Addendum, 4/1:
Impact on GDP growth expectations are illustrated in Figure 3:
One interesting (among many) policy relevant findings:
In countries with large responses of government expenditures, real GDP initially falls by 2.68% but the effect dies out in the second year. For the low government expenditure response countries, real GDP initially falls by 2.84%, an effect that is very persistent. Meanwhile, responses in government tax revenues do not make much of a difference.
In other words, spend money to address the problem. Tax cuts or austerity would be counterproductive. Did I miss anything?
Apparently the current regime kinda gets it for once. I will not hold my breathe that it will last or that there will be meaningful change from the pettiness.
The last round of tax cuts was unpopular and did nothing to improve Trump’s or the GOP’s standing, on average, among voters. This is an election year, and instead of tax cuts, they launch the helicopters. Same checks for all. That is not the whole answer, but I’d be willing to bet that if the recession extends into 2021, the GOP will be much less inclined toward spending, with our without Trump.
If Trump gets reelected, they will be back to their usual. Pandemic or no pandemic.
(unrelated to the posted paper, which at a glance looks like a great paper)
To me, this isn’t a verbal or scribe game of “Tag, you’re it!!!!”. Many national governments and state level governments hav been fudging and intentionally posting low numbers. And some US state governors I even “conspiracy theorize” are even happy they don’t have enough tests kits to go around.
In some ways I felt more at home in northeast China than I do in my native country, so for me, this isn’t a “gotchyeh!!!” thing. But when any government chooses to ignore or blanket over the deaths of any person’s family and close friends, that is only going to cause extreme hurt with their citizenry. And extreme hurt eventually converts to extreme resentment and extreme anger.
https://www.nytimes.com/2020/04/02/us/politics/cia-coronavirus-china.html?action=click&module=Top%20Stories&pgtype=Homepage
“Douche” is a slang term, which has often had a very hazy and indefinite meaning. If you find yourself often baffled by the usage of the term and its meaning, I advise you to consult the following twitter video, only about one minute in length:
https://twitter.com/atrupar/status/1245835666698768390
I wonder whether the Dutch are a bit baffled by the slang use of “douche”. In Dutch, the same word means “shower”. Most Dutch are fluent in English. Oh, well, they figure out about “cut”, so they can probably handle this.
They probably wonder how Americans can turn anything into degeneracy and vulgarity, a valid question (said the man who used the term sometimes). But seriously, Dutch are pretty sharp, I imagine it mostly makes them chuckle to themselves.
Lying to large masses of people always seems to go well doesn’t it?? Well, I’m sure it’s “the flies that always come in when you open the windows”.
https://www.theguardian.com/world/live/2020/apr/03/coronavirus-update-live-news-usa-uk-spain-italy-china-who-middle-east-spike-world-global-cases-latest-updates?page=with:block-5e86847d8f08532a0e66703a#block-5e86847d8f08532a0e66703a
I’m referring to the national border ‘windows” of course (where just outside, all of the dirty flies are so eager to enter today in this early April). 2020 is the time to head to “The Great Wall”, ask any travel agent you know. If we looked at the time foreigners were not allowed into Hubei (which I am cool with, and think was the correct choice) was on January 23 and think of incubation time (the longest number I have heard is 10 days) and the time it takes to “recover” from COVID-19 where does that put the probability of statements like this??
https://twitter.com/XHNews/status/1245908465706385408.
Even those mainland Chinese who fall under the nationalistic category of person, are going to have a hard time figuring out the math on that one.
“In countries with large responses of government expenditures, real GDP initially falls by 2.68% but the effect dies out in the second year. For the low government expenditure response countries, real GDP initially falls by 2.84%, an effect that is very persistent. Meanwhile, responses in government tax revenues do not make much of a difference.”
Didn’t Brian Rield tell us we did not need to increase government spending in response to this health crisis? You – DEFICITS or something like that. BTW – was he on board for the 2017 tax cut?
I am happy to be corrected here. If we look at the documented death/cases ratio or percentage, only 3 states rank worse than Oklahoma right now. Michigan, Washington, and Mitch McConnell’s very sage group of Kentuckians. I’m talking just U.S States here, not U.S. territories, if I left a state out that has worse than a 3.8% death rate, please let me know,
I know I’m beating a dead horse here, and I can understand if people are fatigued by my obsession on this. But one of the reasons I am beating the drum on this, is there are many respected western media outlets that are reporting the Hubei lockdown as a “victory”, and it’s a misreading of events. I’m grateful for journalists, but it’s things like this “victory” in Hubei is how they lose respect with people when they haven’t got a correct gauge on the situation:
https://www.nytimes.com/2020/04/03/world/asia/coronavirus-china-grief-deaths.html?action=click&module=Spotlight&pgtype=Homepage
You know one I get surprised people don’t talk about more often?? My Dad used to bring it up all the time. Polio. I was watching a PBS special on that, it hit its peak in 1952, My father would have been age 25 then. FDR was 39 when he got Polio. Incredibly frightening disease. Usually hit around July–August every year.
https://twitter.com/Baligubadle1/status/1246194417704112128/photo/1