Fernandez-Villaverde and Jones: “Macroeconomic Outcomes and COVID-19: A Progress Report”

From NBER WP 28004:

Our main finding is that most countries/regions/cities fall in either of two groups:
large GDP losses and high fatality rates (New York City, Lombardy, United Kingdom,..)
or low GDP losses and low fatality rates (Germany, Norway, Kentucky, …). Only a few
exceptions, mainly California and Sweden, depart from this pattern.

This correlation has a simple explanation at a mechanical level. Through some
combination of government mandates and voluntary changes in behavior, those areas that suffered high mortality reduced economic activity dramatically to lower social
contacts and slow down the pandemic’s spread. In comparison, those locations that
were able to control the virus from the beginning could maintain economic activity
and suffer fewer deaths.

This observation suggests that controlling the epidemic is vital to mitigating GDP
losses. It is easy to be sympathetic with this view, as it avoids the classical trade-offs
in economics between alternative ends. With COVID-19, the evidence suggests that it
is possible to be successful on both dimensions, minimizing deaths as well as other
economic losses.

Here’s a key graph:

Source: Fernandez-Villaverde and Jones (2020).

21 thoughts on “Fernandez-Villaverde and Jones: “Macroeconomic Outcomes and COVID-19: A Progress Report”

  1. pgl

    “This observation suggests that controlling the epidemic is vital to mitigating GDP
    losses. It is easy to be sympathetic with this view, as it avoids the classical trade-offs
    in economics between alternative ends. With COVID-19, the evidence suggests that it
    is possible to be successful on both dimensions, minimizing deaths as well as other
    economic losses.”

    That makes a lot of sense. Of course Trump and his minions (like our Usual Suspects) will go off with their own absurd interpretations of the data.

        1. pgl

          Australia is a lot bigger than New Zealand. Speaking of New Zealand – it is almost like this virus does not exist.

  2. pgl

    As of Oct. 31, the 7-day average for COVID19 deaths in the US had risen to 857. It was only 704 a few weeks ago:

    https://www.worldometers.info/coronavirus/country/us/

    A few weeks ago Bruce Hall was claiming deaths were down and would not rise. Since then we have heard Trump declare that we have “rounded the corner” with Don Jr. declaring we are having no deaths. Well Don Jr. was using his very reliable source – his Instagram page.

    Has Bruce Hall acknowledged that his little prediction has not materialized? Of course not. We probably have to endure some claim that the doctors are overreporting the data. That is what Bruce Hall – rehash the boss’s lies.

    1. pgl

      Pot calling the kettle black?

      https://www.nbcnews.com/politics/donald-trump/white-house-blasts-fauci-after-he-says-u-s-poorly-n1245675

      The White House is strongly pushing back on a new interview in which Dr. Anthony Fauci, the nation’s leading infectious disease expert, said the U.S. is in a terrible position to face the upcoming months of the pandemic. “We’re in for a whole lot of hurt. It’s not a good situation,” Fauci, director of the National Institute of Allergy and Infectious Diseases, told The Washington Post on Friday. “All the stars are aligned in the wrong place as you go into the fall and winter season, with people congregating at home indoors. You could not possibly be positioned more poorly.” Fauci said the country needs to make an “abrupt change” in its public health practices and behaviors as the holiday season nears. He also said 2020 Democratic presidential nominee Joe Biden’s campaign “is taking it seriously from a public health perspective” while President Donald Trump is “looking at it from a different perspective,” which he said was “the economy and reopening the country.” In a lengthy statement, White House spokesman Judd Deere called it “unacceptable and breaking with all norms for Dr. Fauci, a senior member of the President’s Coronavirus Taskforce and someone who has praised President Trump’s actions throughout this pandemic, to choose three days before an election to play politics.” “As a member of the Task Force, Dr. Fauci has a duty to express concerns or push for a change in strategy, but he’s not done that, instead choosing to criticize the president in the media and make his political leanings known by praising the president’s opponent — exactly what the American people have come to expect from The Swamp,” Deere continued, adding that Fauci “has no confidence in the American people to make the best choice for themselves armed with CDC best practices.”

      In Judd Deere’s world, telling the truth is playing politics and lying to people 24/7 is being Presidential.

      1. macroduck

        Trump tried to use Fauci for political ends. Fauci had till then been more circumspect when correcting Trump’s misstatements.

        Between the worsening of pandemic trends, Trump’s worsening behavior and the lateness of the date, circumspection now would be a disservice to the public – for whom Fauci ultimately works.

  3. pgl

    I guess the Trump strategy to stay in the White is to have the Proud Boys arrest Biden and Harris:

    https://www.cnn.com/2020/10/31/politics/biden-bus-2020-campaign-texas-trump-supporters/index.html

    President Donald Trump on Saturday night appeared to embrace the actions of supporters in Texas who surrounded a Joe Biden campaign bus in what a Biden campaign official described as an attempt to slow down the bus and run it off the road. Trump tweeted a video of the caravan surrounding the Biden bus with the caption, “I LOVE TEXAS!” … The episode was an ugly closing note to the 2020 presidential campaign, which in Texas has seen record-breaking early vote totals that already exceed the number of total votes cast there in the 2016 election. The Biden campaign bus was traveling Friday from San Antonio to Austin as part of a push to urge Biden supporters to cast their ballots on the state’s last day of early voting. According to a source familiar with the incident, the vehicles were a “Trump Train group.” These groups are known in parts of the state and organize events that involve their cars with flags and Trump paraphernalia and drive around to show support for President Donald Trump. The group began yelling profanities and obscenities and then blockaded the entire Biden entourage. At one point they slowed the tour bus to roughly 20 mph on Interstate 35, the campaign official said. The vehicles slowed down to try to stop the bus in the middle of the highway. The source said there were nearly 100 vehicles around the campaign bus. Biden staffers were rattled by the event, the source said, though no one was hurt.

    1. 2slugbaits

      Yep. Pick-up trucks with Trump flags. I’ve seen a lot of the same thing in my town. Sometimes they flaunt climate change and belch black smoke from their exhaust pipes. It’s mostly downscale (read “white trash”) males in their 20s who will eventually migrate to Al Bundy status…former high school footballs heroes whom life has left behind and now have dirt jobs and a lot of white grievances. That’s Trump’s base in a nutshell. The kid who lives across the street from me fits the profile. A few weeks ago the police caught a bunch of them stealing 22 Biden/Harris yard signs.

  4. ltr

    October 31, 2020

    Coronavirus

    US

    Cases   ( 9,402,590)
    Deaths   ( 236,072)

    India

    Cases   ( 8,182,881)
    Deaths   ( 122,149)

    France

    Cases   ( 1,367,625)
    Deaths   ( 36,788)

    UK

    Cases   ( 1,011,660)
    Deaths   ( 46,555)

    Mexico

    Cases   ( 918,811)
    Deaths   ( 91,289)

    Germany

    Cases   ( 531,790)
    Deaths   ( 10,583)

    Canada

    Cases   ( 234,511)
    Deaths   ( 10,136)

    China

    Cases   ( 85,973)
    Deaths   ( 4,634)

  5. ltr

    October 31, 2020

    Coronavirus   (Deaths per million)

    US   ( 712)
    Mexico   ( 706)
    UK   ( 685)
    France   ( 563)

    Canada   ( 268)
    Germany   ( 126)
    India   ( 88)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 9.9%, 4.6% and 2.7% for Mexico, the United Kingdom and France respectively.  These ratios are high, but have been significantly higher, while falling recently as new cases are being rapidly recorded.

  6. ltr

    October 31, 2020

    Coronavirus   (Deaths per million)

    Belgium   ( 987)
    Spain   ( 767)
    US   ( 712)
    Mexico   ( 706)

    UK   ( 685)
    Italy   ( 639)
    Sweden   ( 587)
    France   ( 563)

    Netherlands   ( 431)
    Ireland   ( 386)
    Canada   ( 268)
    Switzerland   ( 265)

    Luxembourg   ( 249)
    Portugal   ( 246)
    Germany   ( 126)
    Denmark   ( 124)

    Austria   ( 123)
    India   ( 88)
    Finland   ( 65)
    Greece   ( 60)

    Norway   ( 52)
    Australia   ( 35)
    Japan   ( 14)
    Korea   ( 9)

    China   ( 3)

    1. pgl

      “Striking that they did not publish the correlation, which appears to be quite low.”

      WTF does that statement even mean? This NBER paper presents a lot of evidence and some useful correlations.

      I sense we have another Trump sycophant trolling here.

  7. ltr

    Latin American countries have recorded 4 of the 10 and 6 of the 16 highest number of coronavirus cases among all countries.  Brazil, Argentina, Colombia, Mexico, Peru and Chile.  Mexico has the tenth highest number of cases among all countries, and the fourth highest number of cases among Latin American countries.

    October 31, 2020

    Coronavirus   (Deaths per million)

    US   ( 712) *

    Brazil   ( 750)
    Argentina   ( 684)
    Colombia   ( 613)

    Mexico   ( 706)
    Peru   ( 1,041)
    Chile   ( 741)

    Ecuador   ( 715)
    Bolivia   ( 743)

    * Descending number of cases

  8. ltr

    https://www.nytimes.com/2020/11/01/business/coronavirus-imf-world-bank.html

    November 1, 2020

    How the Wealthy World Has Failed Poor Countries During the Pandemic
    Despite pledges for debt relief and expanded programs, the World Bank and International Monetary Fund have delivered meager aid, say economists.
    By Peter S. Goodman

    LONDON — Like much of the developing world, Pakistan was alarmingly short of doctors and medical facilities long before anyone had heard of Covid-19. Then the pandemic overwhelmed hospitals, forcing some to turn away patients. As fear upended daily life, families lost livelihoods and struggled to feed themselves.

    On the other side of the world in Washington, two deep-pocketed organizations, the World Bank and the International Monetary Fund, vowed to spare poor countries from desperation. Their economists warned that immense relief was required to prevent a humanitarian catastrophe and profound damage to global prosperity. Emerging markets make up 60 percent of the world economy, by one I.M.F. measure. A blow to their fortunes inflicts pain around the planet.

    Wages sent home to poor countries by migrant workers — a vital artery of finance — have diminished. The shutdown of tourism has punished many developing countries. So has plunging demand for oil. Billions of people have lost the wherewithal to buy food, increasing malnutrition. By next year, the pandemic could push 150 million people into extreme poverty, the World Bank has warned, in the first increase in more than two decades.

    But the World Bank and the I.M.F. have failed to translate their concern into meaningful support, say economists. That has left less-affluent countries struggling with limited resources and untenable debts, prompting their governments to reduce spending just as it is needed to bolster health care systems and aid people suffering lost income.

    “A lost decade of growth in large parts of the world remains a plausible prospect absent urgent, concerted and sustained policy response,” concluded a recent report * from the Group of 30, a gathering of international finance experts, including Lawrence Summers, a former economic adviser to President Barack Obama, and Treasury secretary in the Clinton administration….

    * https://group30.org/images/uploads/publications/G30_Sovereign_Debt_and_Financing_for_Recovery_after_the_COVID-19_Shock_1.pdf

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