Covid-19 and the Macroeconomic Effects of Costly Disasters

By Sydney C. Ludvigson, Sai Ma, Serena Ng. 2020

182 citations recorded by the source corpus.

The outbreak of COVID-19 has significantly disrupted the economy. This paper attempts to quantify the macroeconomic impact of costly and deadly disasters in recent US history, and to translate these estimates into an analysis of the likely impact of COVID-19. A costly disaster series is constructed over the sample 1980:1-2020:04 and the dynamic impact of a disaster shock on economic activity and on uncertainty is studied using a VAR. While past natural disasters are local in nature and come and go quickly, COVID-19 is a global, multi-period event. We therefore study the dynamic responses to a sequence of large disaster shocks. Even in a fairly conservative case where COVID-19 is a 5-month shock with its magnitude calibrated by the cost of March 2020 Coronavirus relief packages, the shock is forecast to lead to a cumulative loss in industrial production of 20% and in service sector employment of nearly 39% or 55 million jobs over the next 12 months. For each month that a shock of a given magnitude is prolonged from the base case, heightened macro uncertainty persists for another month.

Subfields: Economics and Econometrics, Modeling and Simulation, Soil Science

View Paper: https://www.semanticscholar.org/paper/8a7a6c25c2e96a695c8d8c194a2ec0e77a7e7b00

Citations in the corpus

• A counterfactual economic analysis of Covid-19 using a threshold augmented multi-country model (2020, unknown): “Ludvigson et al. (2020) quantify the macroeconomic impact of Covid-19 in the United States using a VAR framework and a gauge of the magnitude of the Covid-19 shock in relation to past costly disasters.”
• The US Labor Market during the Beginning of the Pandemic Recession (2020, unknown): “Ludvigson et al. (2020) use historical data to forecast the macroeconomic impact of COVID-19.”
• A literature review of the economics of COVID‐19 (2020, unknown): “Ludvigson et al. (2020) try to quantify the macroeconomic impact of costly disasters (natural and manmade) and translate them into estimates of the impact of COVID-19.”
• Can the Covid Bailouts Save the Economy? (2020, unknown): “…Rampini (2020), Brotherhood, Kircher, Santos, and Tertilt (2020), Bethune and Korinek (2020), Guerrieri, Lorenzoni, Straub, and Werning (2020), Ludvigson, Ng, and Ma (2020), Alvarez, Argente, and Lippi (2020), Jones, Philippon, and Venkateswaran (2020), Glover, Heathcote, Krueger, and…”
• The Impact of Covid-19 Pandemic on the Global Economy: Emphasis on Poverty Alleviation and Economic Growth (2021, unknown): “In another study, Ludvigson, Ma, and Ng (2020) evaluated the impact of the COVID-19 pandemic on the macroeconomy using the VAR framework.”
• Unmasking the Impact of COVID-19 on Businesses : Firm Level Evidence from across the World (2020, unknown): “Ludvigson et al. (2020), for example, extrapolate from past natural disasters to model COVID-19 as a series of large, multiple-period exogenous shocks.5 Bonadio et al. (2020) use a quantitative framework to simulate a global lockdown as a contraction in labor supply for 64 countries, where labor…”
• The global effects of Covid-19-induced uncertainty (2020, unknown): “The impresive magnitude of the estimated world output loss echoes that n the US economy by Ludvigson et al. (2020), who estimate a umulative loss of 12.75% in US industrial production over a 10- onth horizon; and Pellegrino et al. (2020), who investigate the nteraction between financial uncertainty…”