# Tag Info

## Hot answers tagged covid-19-crisis

19

Both Alice and Kate have bills to pay, regardless of whether they are earning money or not. Restaurants and salons have to pay rent and maintenance on their properties whether they are in business or not. They both need to feed themselves and possibly their families whether they earn income or not. They need electricity and water and other utilities in ...

14

Will printing more money during COVID cause hyperinflation? Likely not for several reasons. First, the article from economicshelp.org you mention is oversimplifying the economics, which is understandable as it is article written for non-economists, but to understand this issue we need to go little bit further. Inflation, is simply just positive change in ...

13

Trade is good because it creates efficiency. Alice has invested in her kitchen and knows the supply chain of ingredients, and due to the efficiency of her business, she can sell a meal for $50. If Kate wants to cook the same meal, she'll have to buy all the necessary equipment and ingredients, and spend time learning cooking techniques, and by the end, she'... 10 "The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19", Thunstrom et al. We examine the net benefits of social distancing to slow the spread of COVID-19 in the United States. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to ... 8 With the right keywords (and author searches) from earlier papers, I actually found some academic output already; this might not be peer-reviewed yet, i.e. preprints: McKibbin and Fernando (2 March 2020) The Global Macroeconomic Impacts of COVID-19: Seven Scenarios examines the impacts of different scenarios on macroeconomic outcomes and financial ... 8 Let's consider another example. I'm an automotive manufacturing service engineer; I build and repair machines that are used to build and repair cars. I use the money I earn to buy a variety of things, including, say, gasoline. Of course, if all of the automotive manufacturing service engineers stop working, that's no big deal. People can just build their ... 7 Most people aren't Alice and Kate. GDP is a measure of the total goods and services produced within an economy. The point is measuring total production, not measuring how much money is changing hands. There are a couple of things going on here: In the example you mention of Alice and Kate, there is presumably some reason why they were paying each other ... 6 The Institute for Fiscal Studies has published research by Banks et al. entitled Recessions and health: the long-term health consequences of responses to the coronavirus, which investigates the ways existing literature and models on this topic can be applied to the current COVID-19 pandemic, with a specific focus on the UK. In particular, they attempt to ... 6 I have two here to add to your list. Brookings Insitute https://www.brookings.edu/events/ St. Louis Fed Economic lowdown (FREE) https://www.econlowdown.org/ There is also the National Association of Business Economics (NABE) But to get access to their webinar resources you have to register on their site. I know this won't qualify as it is not free ... 5 In addition to the +1 answer of @KennyLJ which corrects the misconception beteen money and value, let me address the question in your last paragraph directly. Even if we could assume for a sake of the argument that we can manage to perfectly redistribute all income from people and businesses who are still able to operate and produce value (such as netflix, ... 5 Indifference curves represent preferences. Preferences are usually assumed to be stable, i.e. they do not change. So no, indifference curves don't shift. 4 There is a nice overview table with 33 econ webinar series (by April 10th) available here: https://sites.google.com/view/econ-webinars/ Difficult for me to find out who is behind this great initiative. 4 In a few days, the Royal Economic Society in the UK is hosting Economic approaches for analysing the short, medium term and long run impact of the COVID-19 crisis featuring Daron Acemoglu and Jean Tirole. 4 This left me wondering what happens to the wider economy when people decide en masse rather than spending their disposable income on consumer goods/services, to instead pay down their debt and save/invest? tl;dr: Answer depends on the situation/time horizon you are talking about. In long run increasing saving and investment will have no negative impact on ... 3 It is not correct to say that the Coronavirus Job Retention Scheme is essentially providing loans. A little background. The UK government currently has two major schemes to support businesses and through them their employees: the Coronavirus Business Interruption Loan Scheme for small / medium businesses together with a similar scheme for large businesses, ... 3 Not by itself. The inflation generally depends on the following monetary relation: $$MV =PY$$ Where M is money supply, V velocity of money (how much one buck is used in economy), P is the price level (change in which is inflation), and Y is a real output. Now solving for P so we can focus on inflation gives us: $$P=\frac{MV}{Y}$$ Hence price level (and ... 3 First, the two examples you list here are not equivalent. In the first example some portion of money circulating in economy is destroyed by the computer virus so reverting it would just keep amount of money in economy constant whereas in the second case you actually expand money supply because people 'loosing money' due to paying rent etc does not mean money ... 2 As a disclaimer, this is not an answer, rather a long-form explanation of the difficulties of answering. The first leg is uncertainty about the danger of the epidemic. Economists are not medical experts. For example, one could imagine that there is an amazing breakthrough where a common medicine saves patients. The economic effects of that scenario are very ... 2 There are lots of different people unemployed, and the answer will be different depending on the person. In your prostitute example, if you left your medical assistant job because prostitution paid more, then it's frictional, because there are lots of medical assistant jobs, but it might take you time to go through the interview process and be onboarded. If ... 2 It creates losses. First, many businesses don’t own their own building/land/equipment. It’s very common to lease these things. Moreover, many business take out insurance that again has to be paid on monthly basis. In Europe in many countries you need to pay workers certain portion of wages even when you can’t call worker to work or even if they stay home ... 2 One standard way of determining the fair value of a bond yield (for a country that controls the currency it borrows in) is to say that it is the sum of two factors. The expected (Geometric) average of the overnight rate (that is set by the central bank) over the life of the bond. This equals the expected return of holding money market instruments instead of ... 2 I am not sure about a way to look at it from an economics perspective since I am no economist. However, I am someone interested in this question and looking into doing academic research into this. Here is a few way I would look at this: Economic Perspective: One of the things I would be interested in is looking at the correlations between the severity of ... 2 The government(s) [probably] assume that this is lockdown is a temporary situation so having companies fail during the lockdown would mean that when the lockdown is lifted there would be no jobs for the unemployed to return to. It's true that in completely laissez faire approach you could also assume that the companies would be recreated quickly, so ... 2 Capitalism is predicated on an expanding economy. When Mr. Moneybags goes to market, he exchanges his money ($M$) for the commodity of labor ($C$). He employs this labor to create further commodities, which he then sells for some amount of money ($M'$). This process only makes sense if$M' > M$. Since$M'$is collected at a later date than$M\$ is launched ...

2

What your example doesn't include is the relative ability of each person to provide a needed product or service. If we expand your example this becomes clearer: Kate spends 50 USD on a meal which takes Alice 30 minutes to produce. Kate can produce that same meal in 1 hour. Alice spends 50 USD on a haircut from Kate which takes 30 minutes. Alice can cut hair ...

2

A lot of the answers you've already received address questions like "what is the benefit to trade" or "why do we have specialization of labor." I think this is a little more basic than what you asked--I'm assuming you meant not 'why do we have an economy' but "why do we need to 'get the economy moving again' right now", rather ...

2

From a simple and purely theoretical point of view: Option (A) would give you a lower level of consumption and income state-wide and generally is a budget-balancing method, not an economic equilibrium-producing method. Option A is surely on the opposite side of the "policy target" spectrum, compared to B and C. Option (B) is considered best when ...

1

Let's first clarify one concept. Risk premium is the extra expected return that an investor demands (not of the market, here is the key) over the return of risk-free asset (usually government bonds). Then it becomes clearer that a higher market risk premium during a crisis does not mean the market is expected/able to achieve higher returns. It rather ...

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