Seminar
Covid-19, Business Destruction and Productivity Effects
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SeriesBrown Bag Seminars General Economics
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FieldMacroeconomics
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LocationOnline
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Date and time
June 17, 2021
12:00 - 13:00
This paper presents a
model economy which entails two heterogenous sectors, proxying the social and
non-social industries. When the Covid-19 pandemic starts, households optimally
cut consumption and labor from the social/contact sector to reduce their risk
of contagion, reallocating part of their demand to the safer non-social sector.
This reallocation leads to substantially different patterns in sectoral entry
and exit, which are found in the data. Since the sectors are populated by
heterogenous firms, alterations on the extensive margin affect the average
productivity of the industry. Robustness checks through policy experiments as
well as cross-country analyses corroborate our claims.
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