August 2020

A number of updates:

• A draft of my recent work with Ben Moll and Gianluca Violante on the distributional consequences of alternative policy responses to the COVID-19 pandemic is finally available: “The Great Lockdown and the Big Stimulus: Tracing the Pandemic Possibility Frontier for the U.S.” . In order to avoid taking a stand on the economic value of a life, we advocate the use of distributional Pandemic Possibility Frontier (PPF) for evaluating the trade-offs between lives and livelihoods associated with different policies. The non-linearity of the PPF can help reconcile different views in the current debate over the existence of a trade-off when considering lockdowns of different lengths. Under all policies that we consider, the economic costs are large and heterogeneous. This heterogeneity arises from the fact that households whose earnings are most exposed to the pandemic (those in social occupations with low capacity to work from home) are also the most financially fragile. Targeted policies such as Pigouvian taxes on on-site work and socially intensive consumption, with appropriately designed rebates can greatly flatten the PPF and deliver lower economic costs for the same loss in lives.

• My paper with Andreas Fuster and Basit Zafar “What Would You Do With $500? Evidence from Gains, Loss, News and Loans” is now forthcoming in Review of Economic Studies.

• My paper with Felipe Alves, Ben Moll and Gianluca Violante “A Further Look at the Propagation of Monetary Policy Shocks in HANK” is now forthcoming in Journal of Money, Credit and Banking (25th anniversary issue).