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Last updated: April 27, 2021


Propagation of shocks in global value chains: the coronavirus case

Before spreading globally, the Covid-19 epidemic was concentrated in the Hubei province. To contain the spread of the virus, the Chinese government has imposed quarantine measures and travel restrictions, entailing the slowdown of economic activity. We study the propagation of this geographically concentrated productivity slowdown to the global economy, through global value chains. Reliance on Chinese inputs has dramatically increased since the early 2000s. As a consequence, most countries are exposed to the Chinese productivity slowdown, both directly through their imports of Chinese inputs and indirectly, through other inputs themselves produced with some Chinese value added. This note aims at quantifying the total exposure of France compared to other countries. First, we compute the share of Chinese value added in French production. Then, we use data at the country and sector levels to quantify the impact of travel restrictions on French GDP.


Corona bonds, with or without Germany

This paper details how France could introduce Coronabonds without the participation of Germany, in concert with the European states that wanted them, via the creation of a European Treasury Agency, established by a Treaty of European Solidarity. The creation of the Coronabonds is an important element in assisting the economies of member states of the Eurozone, especially countries of the south (Italy and Spain). In addition, the introduction of a 30% tax on multinational profits would finance a deficit of 10% of GDP over a period of 5 to 7 years, by reversing the reductions in company tax rates that have occurred since 1980. The reduction in rates paid by multinationals weakens states’ resilience by undermining their capacity to fund public services; the latter will now benefit from financial support in this crisis period.


COVID-19: Europe needs a catastrophe relief plan

The unfolding coronavirus epidemic represents a severe economic stress test for Europe as well as a test of European unity. This column discusses how the crisis might unfold and the appropriate policy response. It advocates a comprehensive emergency package through which the EU would take responsibility for a meaningful share of the overall emergency effort.


COVID-19, inequality, and gig economy workers

While some countries have provided assistance to workers unable to perform tasks from home during the COVID-19 pandemic, certain categories of workers tend to fall through the cracks of these programmes. This column reports the findings of a survey of precarious workers in France, including gig economy workers such food delivery bikers. Traditional gig economy workers with incomes under €1,000 a month were more likely to keep working despite the highly elevated health risk of doing so, suggesting that the support in place is leaving some low-income workers exposed.


Lockdown exit and control of the Covid-19 epidemic: group tests can be more effective

The lack of efficient mass testing tools for SARS-CoV-2 virus that causes Covid-19 has contributed to the accelerated spread of the epidemic. Infected people are unaware that they are spreading the disease during the incubation period as well as in asymptomatic cases or cases with mild symptoms. To limit the number of victims of the epidemic, the strategy adopted by most affected countries is therefore social distancing or complete lockdown, a strategy that can only be beneficial for a limited time, given its economic and social cost. Today, the most feasible way out of the stalemate requires widespread screening of the population. Such screening would make it possible to isolate infected people and allow others to leave the lockdown. However, production capacity for SARS-CoV-2 tests is limited. Although production is increasing, it will not allow for sufficiently systematic and frequent screening to permit the lifting of health restrictions. We here describe how the usefulness of each test can be amplified by applying it to the mixture of samples from several individuals. This technique, called group testing, has already been successfully applied on SARS-CoV-2. We show how the group-test method must be calibrated to maximize the usefulness of each available test.


The economics of wage compensation and corona loans: Why and how the state should bear most of the economic cost of the COVID lockdown

Due to COVID-19, large parts of the world economy are being put on hold by government fiat. We argue that – on efficiency as well as equity grounds – the state should generously support not only labour but also capital costs, the latter through ex ante partially reimbursable, rapidly disbursed ‘corona loans’. The exact criteria for reimbursement can be determined ex post – depending primarily on the sector-level severity of lockdown-induced income shortfalls.


COVID-19: Speeding up vaccine development

The health costs of the Covid-19 pandemic are considerable, and the economic and social costs of lockdown policies are even larger. This column calls for an innovative mechanism to foster the development of a vaccine against Covid-19. Governments would commit now to buy back any patent obtained by a private firm which would discover an effective vaccine, at a price of €60 billion, and would grant the right to produce the vaccine to any firm able to do so. This mechanism would provide strong incentives to innovate, while protecting firms from the political risk of expropriation.


Assessing the wellbeing impacts of the Covid-19 pandemic and three policy types: Suppression, control, and uncontrolled spread

The COVID-19 pandemic has forced a trade-off between limiting its health impact and maintaining economic activity. Welfare economics offers tools to conceptualize this trade-off. We review four such tools: value of statistical life (VSL), value of statistical life years (VSLYs), quality-adjusted life-years (QALYs), and social welfare analysis. We find the last tool to be superior. We discuss how to choose policies that affect people’s wellbeing differentially. We argue for evaluating policies using a social welfare function, which should especially consider increasing the wellbeing of the less well off. We propose a model to illustrate how this framework can evaluate two policy types in response to the pandemic: eradication of the virus, and more lenient control of the spread. The evaluations depend on empirical facts but also on key value judgments about the relative importance of health and concern for the worse off. The purpose of this brief is not to make precise recommendations, as conditions vary widely across countries and over time, but to provide a methodology.


Introspection, values and life choices at the time of COVID-19

The current crisis, and especially the period of confinement during which this survey was conducted, may have led people to take stock of their projects, their values, the directions they have taken in life. If, for some, this introspection was possible, it could however have been disrupted by various real shocks or simply by anxiety or other emotions generated by the risks associated with potential shocks (health problems for oneself or one’s loved ones, economic crisis, family tensions, anger towards those who do not respect the barrier gestures, etc.) The survey therefore asked respondents about the reality of such introspection, whether a re-evaluation of their life goals had occurred and in what areas, and whether this had moved them closer or further away from their deepest desires, and it examines whether the context of this crisis contributed to this process...


Closing the COVID Trust Deficit

The arrival of COVID-19 vaccines is giving the world hope of ending the pandemic, but many countries remain consumed by the virus’s spread. So, as we wait for widespread availability and distribution of the vaccines, preventive health measures such as social distancing, mask-wearing, and hand-washing will remain critical to containing the disease. For some, following this guidance is not feasible. Many poor people, for example, must contend with overcrowding, limited access to clean water and soap, and the absence of robust social safety nets...


Just allocation of COVID-19 vaccines

Authorized COVID-19 vaccines must be distributed fairly. Several proposals have emerged offering guidelines for how to do this. However, insofar as the aim is to have the greatest health impact, these proposals fall short. We offer three suggestions to strengthen them. The most advanced attempt at coordinating vaccine distribution is the COVID-19 Vaccines Global Access (COVAX) facility, a collaboration that brings together governments, companies, international organisations and others to accelerate the development and manufacture of COVID-19 vaccines. A total of 182 countries have joined the facility so far, which has secured about US$2 billion for its advance market commitment (AMC). The AMC will allow 92 low-income and middle-income countries to obtain vaccine doses as they are approved or authorised. Currently, COVAX is set up so that in a first phase poor countries can vaccinate 3% of their populations, while rich countries can vaccinate up to 50%...


Sleep behaviour before and during the COVID-19 Pandemic in 6 European countries

The World Sleep Society celebrates World Sleep Day® on Friday, March 19th 2021. The slogan for the 14th annual World Sleep Day is ‘Regular Sleep, Healthy Future.’ World Sleep Day is a reminder to everyone about the importance of sleep for achieving an optimal quality of life and improving global health. We here show results from the COME-HERE data, that follows the same pool of individuals over time. The four rounds of survey in France, Germany, Italy, Spain and Sweden were conducted in April/May (8,063 respondents), June (4,788 participants), August (5,565 respondents), and November/December 2020 (5,594 respondents). In Luxembourg and the Greater Region the survey was conducted in three rounds in the months of April/May (n=1007), July/August (n=782), and October/November (n=541). Importantly, for this report, the COME-HERE survey gauged sleep behaviour both before and at these four points during the pandemic. It also collects information on self-assessed sleep quality...


Information about Gender (in)Equality from 5 European countries during the COVID-19 Pandemic

The COME-HERE survey is nationally representative and follows the same pool of individuals over time. The four rounds of survey were respectively conducted in April/May (8,063 respondents), June (4,788 participants), August (5,565 respondents), and November/December 2020 (5,594 respondents). Below descriptive evidence is presented and highlights differences and similarities with respect to gender and gender inequality. We present here only a few facts. Females still undertake considerably more time spent on daily household chores and child care than males in France and Spain. A result that has been consistent throughout the pandemic, with differences that are often strongly statistically significant...


Aiming for zero Covid-19 to ensure economic growth

With the pandemic continuing now for over a year, it has become clear that there is no trade-off between health and wealth. Successful pandemic management has relied on aiming for and protecting Covid-free green zones. This column argues that by choosing a swift elimination strategy, several countries around the world have gained control over the virus. They did this by minimising fatalities and uncertainty, and are now already rebuilding their economies. By contrast, most European countries have followed a stop-and-go logic that turned out to be more restrictive, more dangerous, and more damaging to the economy.


COVID-19, well-being and our working lives

Covid-19 has changed our lives in many ways. We here concentrate on the way in which we work, and analyse the relationship between working from home and well-being. We have five measures of the latter: life satisfaction, the feeling of having a worthwhile life, loneliness, anxiety, and depression. One of the most striking impacts of the pandemic has been on where we work. Among EU countries, the percentage working from home was 5% in 2019, but rose to over one-third in July 2020. The figure in COME-HERE data is comparable, with 39% of workers working from home in March/April 2020. This figure fell in the August wave with the relaxation of restrictive measures, but then rose again in November to 31% during the second Covid-19 wave. Restrictions (including homeworking) and pandemic spread are obviously related...


French firms through the COVID storm: Evidence from firm-level data

The question of how to deal with the legacy of the COVID-19 crisis in the corporate sector is moving to the centre of policymaking. This column presents results from a microsimulation which suggest that the crisis almost doubled the share of newly insolvent French firms from March to December 2020 from 3.6% to 6.6%. However, without public support this number may have reached 11.9%. The findings also indicate that the cleansing effect of firm exit is still there, but it is less effective than in normal times.