Macroeconomic Outcomes and COVID-19: A Progress Report Jes us Fern - PowerPoint PPT Presentation

Macroeconomic Outcomes and COVID-19: A Progress Report Jes´ us Fern´ andez-Villaverde and Chad Jones September 24, 2020 Brookings Papers on Economic Activity 0

Overview • Data on Lost GDP and Covid Deaths ◦ No simple tradeoff ◦ Complicated interaction: policy, history, luck, and timing • Outline ◦ Simple framework ◦ Cumulative losses across countries, cities, and states ◦ Dynamics Key Lesson: A heterogeneous set of places — Seoul, Tokyo, Germany, Norway — have good performance on both dimensions. We should study them! 1

Covid Deaths per Million People, September Seoul 5 Tokyo 25 Norway 50 Germany 100 San Francisco 200 NY excluding NYC 400 Florida, Italy, U.S., U.K., Brazil, Spain, London 600 Paris, Mississippi, Washington DC 800 Louisiana, Miami, Chicago, Philadelphia 1000 Madrid, Boston, Stockholm 1400 Lombardy, New Jersey 1700 New York City 2800 2

Short-Term Trade Off GDP LOSS (PERCENT) Shut down economy Keep economy open COVID DEATHS PER MILLION PEOPLE 3

Dynamics, Policy, and Luck Can Shift the Tradeoff GDP LOSS (PERCENT) Bad policy or bad luck Good policy or good luck COVID DEATHS PER MILLION PEOPLE 4

Putting together... GDP LOSS (PERCENT) Bad policy Shut down economy or bad luck Good policy Keep economy open or good luck COVID DEATHS PER MILLION PEOPLE 5

International Covid Deaths and Lost GDP, 2020 GDP LOSS (PERCENT YEARS) 7 Spain Philippines France United Kingdom 6 India Italy Portugal 5 Mexico Colombia Slovenia Belgium Slovakia South Africa 4 Greece Austria New Zealand Brazil Germany Singapore Switzerland 3 Israel United States Turkey Netherlands Luxembourg Denmark China Ireland Poland Japan Sweden Norway 2 Chile Korea, South Russia 1 0 Taiwan -1 0 100 200 300 400 500 600 700 800 900 COVID DEATHS PER MILLION PEOPLE 6

U.S. States: Covid Deaths and Cumulative Excess Unemployment CUMULATIVE EXCESS UNEMPLOYMENT (PERCENT YEARS) 7 NV HI 6 MA 5 MI RI NY CA NJ IL 4 FL NH PA OR WA DE OH VT IN TN CO SC 3 TX WV LA NM WI AZ ME AK GA MD CT AR MN 2 MS MO ID KY MT SD UT DC WY NE 1 0 200 400 600 800 1000 1200 1400 1600 1800 2000 COVID DEATHS PER MILLION PEOPLE 7

Google Mobility Reports Data • Available daily, very disaggregated geographically, up to date ◦ In contrast to GDP and unemployment • Use the retail and restaurants component • Good correlation with other measures ◦ Correlation with GDP loss = 0.68 ◦ Correlation with state excess unemployment = 0.69 8

Google Activity Data for Key Global Cities 20 Percent change relative to baseline 0 Seoul Stockholm -20 Tokyo -40 Lombardy London -60 NYC -80 Madrid Paris -100 Feb Mar Apr May Jun Jul Aug Sep Oct 2020 9

Google Activity Data for U.S. States 20 Percent change relative to baseline 0 Texas -20 Florida Arizona California -40 D.C. New York -60 -80 Feb Mar Apr May Jun Jul Aug Sep Oct 2020 10

Covid Deaths and Cumulative Google Activity CUMULATIVE REDUCED ACTIVITY(PERCENT YEARS) 30 India 25 United Kingdom Spain 20 France Italy Mexico Portugal Belgium Austria Switzerland 15 United States Indonesia Germany Norway 10 Japan Sweden Denmark Korea, South 5 Taiwan 0 0 100 200 300 400 500 600 700 800 900 COVID DEATHS PER MILLION PEOPLE 11

Global Cities: Covid Deaths and Cumulative Google Activity CUMULATIVE REDUCED ACTIVITY(PERCENT YEARS) 40 New York City 35 SF Bay Area Paris London 30 Madrid, Spain Boston 25 Lombardy, Italy Los Angeles 20 Miami Chicago Tokyo, Japan Houston 15 Stockholm 10 Seoul, Korea 5 0 500 1000 1500 2000 2500 3000 COVID DEATHS PER MILLION PEOPLE 12

Dynamics: Outcomes over Time 13

Countries: Monthly Evolution from March to September REDUCED ACTIVITY (PERCENT) 80 70 60 50 40 30 United Kingdom United States 20 Sweden Norway 10 Italy Germany 0 1 2 4 8 16 32 64 128 256 512 1024 2048 COVID DEATHS PER MILLION PEOPLE 14

Countries: Monthly Evolution from March to September REDUCED ACTIVITY (PERCENT) 80 70 60 50 40 India 30 Mexico 20 Spain Korea, South Portugal France Belgium Austria Japan Indonesia Switzerland 10 Taiwan Denmark 0 1 2 4 8 16 32 64 128 256 512 1024 2048 COVID DEATHS PER MILLION PEOPLE 15

Global Cities: Monthly Evolution from March to September REDUCED ACTIVITY (PERCENT) 90 80 70 60 New York City 50 40 London Paris Madrid, Spain 30 Tokyo, Japan Seoul, Korea 20 Stockholm Lombardy, Italy 10 0 1 2 4 8 16 32 64 128 256 512 1024 2048 COVID DEATHS PER MILLION PEOPLE 16

Global Cities: Monthly Evolution from March to September REDUCED ACTIVITY (PERCENT) 80 70 60 SF Bay Area 50 40 Boston Los Angeles Miami 30 Chicago Houston 20 10 1 2 4 8 16 32 64 128 256 512 1024 2048 COVID DEATHS PER MILLION PEOPLE 17

U.S. States: Monthly Evolution from March to September REDUCED ACTIVITY (PERCENT) 65 60 55 50 DC 45 40 35 CA 30 NY WA 25 NJ MA PA 20 MI 15 1 2 4 8 16 32 64 128 256 512 1024 2048 COVID DEATHS PER MILLION PEOPLE 18

U.S. States: Monthly Evolution from March to September REDUCED ACTIVITY (PERCENT) 50 45 40 35 30 AZ FL 25 TX GA 20 AL 15 10 MT SD 5 0 1 2 4 8 16 32 64 128 256 512 1024 2048 COVID DEATHS PER MILLION PEOPLE 19

Concluding Remarks 20

Summary GDP LOSS New York City Lombardy California United Kingdom [lucky? too tight?] Madrid [unlucky? bad policy?] Germany, Norway Japan, S. Korea Sweden China, Taiwan [unlucky? too loose?] Kentucky, Montana [lucky? good policy?] COVID DEATHS 21