Authors Dario Perkins
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Nice article from @MESandbu. This from a theme in sellside research before Christmas. Could the pandemic break secular stagnation & deliver a decade of strong growth?
Historical evidence clear - pandemics are usually deflationary, causing lower r*. Big difference with wars, which usually cause r* to rise. Great Jorda et al paper on this
Here is their main result
Historically, Wars destroyed both capital stock and labour force. Pandemics killed millions but left capital stock untouched. Covid-19 is neither of these things. Workforce hasn't plunged, capital stock untouched. Comparison with 1920s is a stretch. So precedent for today..
Some more recent evidence based on modern health crises shows only a short-lived boost to GDP, then weaker trend then before. See this Vox column
\u201cYou do not have to be an economist, only human, to understand the desire to let loose, get together, and take risks after a year of cautiously locking down at home and distancing ourselves from one another.\u201d From a wonderful @MESandbu colhttps://t.co/MvFMmeLs5G
— Tony Tassell (@TonyTassell) January 1, 2021
Historical evidence clear - pandemics are usually deflationary, causing lower r*. Big difference with wars, which usually cause r* to rise. Great Jorda et al paper on this
Here is their main result
Historically, Wars destroyed both capital stock and labour force. Pandemics killed millions but left capital stock untouched. Covid-19 is neither of these things. Workforce hasn't plunged, capital stock untouched. Comparison with 1920s is a stretch. So precedent for today..
Some more recent evidence based on modern health crises shows only a short-lived boost to GDP, then weaker trend then before. See this Vox column