COVID-19 Shock Research Articles

The COVID-19 Shock Through the Lens of the Spanish Sales Daily Data: Modeling and Seasonal Adjustment Challenges

We explore the impact of the COVID-19 shock on a very high frequency indicator: the Spanish daily sales data compiled by the Tax Agency. Firstly, we present a detailed list of the issues related to its modeling, its decomposition (trend, seasonality, and irregularity) and its final seasonal adjustment, which requires a set of deterministic factors linked mostly to calendar effects. Then, we assess the impact of the COVID-19 shock on these tasks. This assessment provides a timely perspective on the evolution of the shock and the challenges that it posed for modeling and seasonal adjustment, clearly related to its unusual and extreme features. The aim of the paper is eminently empirical and dominated by the need to square the unprecedented shock with the available methods and software in a computing environment centered on the R programming language. The methodology draws heavily on a structural approach and it is currently in use by the Tax Agency to compile and disseminate its daily sales data.

COVID-19 Severity and Food Insecurity: Evidence from Pakistan

COVID-19 caused serious food disruptions worldwide and raised food insecurity levels. To further understand how COVID-19 impacted food insecurity, this study used nationally representative data from Pakistan to examine the effect of negative COVID-19 shock on food insecurity and its heterogeneity across different income groups. COVID-19 shock was quantified by a subjective measure based on self-reported exposure to the severity of COVID-19. We found that households struck severely by COVID-19 were about 26% more likely to report a lack of healthy food, almost 35% more likely to skip a meal, around 33% more likely to run out of food, and around 20% more likely to go without food for one whole day in comparison to the households unexposed to the severe COVID-19 shock. Furthermore, households affected by severe COVID-19 shock, especially those in the lower income quartiles, faced acute food insecurity. We constructed two additional proxies for this negative COVID-19 shock based on the objective assessment of income loss due to the lockdown measures in Pakistan to examine the robustness of the findings, and they also led to similar outcomes. Overall, the findings suggested that poorer and COVID-19-stricken households faced severer food insecurity and required urgent support.

The Impact of COVID-19 Shocks on the U.S. Unemployment Rate

Abstract: The COVID-19 pandemic has had a profound impact on the U.S. labor market, resulting in significant fluctuations in unemployment rates across various demographic and educational groups. This paper examines the trends in unemployment from January 2020 to December 2021, a period characterized by intense economic upheavals due to public health measures and subsequent economic recovery initiatives. Utilizing data from the U.S. Bureau of Labor Statistics, the study explores how unemployment rates varied among different racial groups and levels of educational attainment, identifying which groups were most vulnerable to job losses and which experienced more resilient employment patterns. The findings reveal that the pandemic exacerbated existing disparities in the labor market, with particularly severe impacts on Black or African American individuals and those with lower educational levels. The paper also discusses the gradual recovery observed in unemployment rates as the economy began to stabilize, though noting that full recovery was not uniform across all groups and make a conclusion that there are significant differences in the impact of different racial groups and levels of education on unemployment rates. Through this analysis, the research provides insights into the structural weaknesses in the labor market exposed by the pandemic and offers recommendations for targeted policy measures aimed at fostering a more equitable economic recovery. This study contributes to the broader understanding of the economic implications of global health crises and the critical role of inclusive policy interventions in mitigating these effects.

Financial well-being, anxiety and payment delinquency among student loan holders in the United States: insights from the COVID-19 pandemic

PurposeThe COVID-19 pandemic presented unprecedented challenges, particularly intensifying the financial and psychological burden for individuals with student loans in the United States. Firstly, this study examined the association between student loan ownership and financial well-being during the pandemic. Secondly, among student loan holders, we tested the association of financial anxiety and payment delinquency with COVID-19 shocks and financial knowledge. Lastly, we investigated the associations between the recipients of student loans and their financial well-being, anxiety and behaviors concerning student loans.Design/methodology/approachUtilizing data from the 2021 National Financial Capability Study, we explored how unprecedented economic disruptions have affected student loan holders' financial well-being, levels of debt anxiety and payment delinquency, considering financial knowledge as a critical factor. We conducted Ordinary Least Squares (OLS) and logistic regressions to examine the associations addressed in the purpose of the study.FindingsThe results of regression analyses indicate that individuals with student loans generally experienced lower financial well-being than those without loans. Among student loan holders, COVID-19 shocks were positively associated with student loan anxiety and payment delinquency. Additionally, subjective financial knowledge showed a positive association, while objective financial knowledge displayed a negative association with loan delinquency. Lastly, respondents who secured loans for themselves exhibited lower levels of financial well-being than other student loan holders.Originality/valueThis study represents one of the initial efforts to investigate the issues of financial well-being, debt anxiety and payment delinquency among student loan holders, along with their associations with the potential COVID-19 shocks they experienced. The research shed light on the acute financial stress and mental health challenges faced by student loan holders during global crises, highlighting the significance of effective policy development for student debt management and borrower support during times of economic uncertainty.

Quantitative Evaluation of Microcirculatory Alterations in Patients with COVID-19 and Bacterial Septic Shock through Remote Photoplethysmography and Automated Capillary Refill Time Analysis.

Background and Objectives: Sepsis, a leading global health challenge, accounts for around 20% of deaths worldwide. The complexity of sepsis, especially the difference between bacterial and viral etiologies, requires an effective assessment of microcirculation during resuscitation. This study aimed to evaluate the impact of infusion therapy on microcirculation in patients with sepsis, focusing on bacterial- and COVID-19-associated sepsis using remote photoplethysmography (rPPG) and the automated capillary refill time (aCRT). Materials and Methods: This single-center prospective study was conducted in the ICU of Pauls Stradins Clinical University Hospital, including 20 patients with sepsis/septic shock. The patients were selected based on hemodynamic instability and divided into COVID-19 and Bacterial Septic Shock groups. Fluid responsiveness was assessed using the Passive Leg Raising Test (PLRT). Systemic hemodynamics and microcirculation were monitored through MAP CRT, rPPG, and serum lactate levels. Statistical analyses compared responses within and between the groups across different stages of the protocol. Results: The Bacterial group exhibited higher initial serum lactate levels and more pronounced microcirculatory dysfunction than the COVID-19 group. rPPG was more sensitive in detecting perfusion changes, showing significant differences between the groups. The automated CRT demonstrated greater sensitivity compared to the manual CRT, revealing significant differences during PLRT stages between bacterial- and COVID-19-associated sepsis. Both groups had a transient hemodynamic response to PLRT, with subsequent stabilization upon fluid infusion. Conclusions: When managing patients with sepsis in intensive care, monitoring microcirculation is of paramount importance in infusion therapy. Our study highlights the potential of rPPG and aCRT as tools for this purpose. These techniques can be used in conjunction with routine parameters, such as lactate levels and systemic hemodynamic parameters, to provide a comprehensive assessment of a patient's condition.

Covid-19 and intra-household financial coping strategies in Pakistan

The economic challenges due to the Covid-19 are likely to be acuter in developing countries as their population predominantly relies on informal activities not protected through insurance or government support. To understand how people are coping with the Covid-19 challenges, this study investigates seven important financial coping strategies of households in Pakistan using a nationally representative large dataset of 6000 households. The data was collected by the government right after the acute stage of the Covid-19 to study the economic implications of pandemic. By using the binary logit regressions our results show that households exposed to a severe negative Covid-19 shock have higher odds of using their savings or investments, acquiring loans, quitting education of their children, not paying their utility bills, and selling their productive assets in comparison to the households unexposed to a severe Covid-19 shock. Furthermore, a gender-based comparison between severely affected male and female-headed households reveals that female-headed households are two times less likely to discontinue the education of their children, obtain informal loans, and sell their productive assets to cope with the Covid-19 shock. This reflects better financial management among female as compared to male-headed households. Lastly, compared to urban households, rural-affected households also have higher odds of quitting the education of their children and not paying utility bills. The findings highlight the severity of the pandemic in a developing country and call for a swift and targeted government response to ensure minimum well-being of the households.

The costs of corporate debt overhang

We make use of rich U.S. data to show that debt overhang significantly reduces firm asset-, capex-, and employee-growth. We show these contractions are likely driven by firm decisions as opposed to the result of credit constraints or changes in investment opportunities. Our measure of overhang – liabilities to cash flow — aligns with traditional theory and focuses on the importance of a firm’s debt servicing capacity. It further allows us to capitalize on the COVID-19 shock as a quasi-natural experiment to confirm the impact of overhang on firm investment and growth.

Assessing Household Financial Behavior During COVID-19: A Focus on Expenditure and Savings

This study aims to investigate the effects of the COVID-19 pandemic on household expenditure, savings, and financial behavior in low- to middle-income households in Indonesia. The research analyzes how the pandemic influenced household financial management, particularly in terms of spending reductions and shifts in saving behaviors. Data were collected from 100 households through structured surveys, and the analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). The methodology allowed for both direct and indirect relationships between household expenditure, savings, and the economic shock of COVID-19 to be explored. The results indicate a positive correlation between household expenditure and savings, where higher-income households were able to save more despite greater spending. However, the pandemic negatively impacted both expenditure and savings, with households reducing non-essential spending and relying on their savings due to income uncertainty. Additionally, the pandemic indirectly influenced savings by affecting household expenditure. These findings highlight the financial vulnerability of lower-income households during economic disruptions and underscore the importance of enhancing financial resilience. Policy recommendations include promoting financial literacy, expanding access to financial resources, and providing targeted support to help households navigate future economic crises.

War shock and the economy

AbstractThe main features of war shock are substantially different from those of the preceding COVID-19 shock. The EU economy is showing important elements of resilience. The existing structural forces and adaptive capacity of the EU economy are clear indications that it is capable of transformation and avoiding recession.The dynamics of the war is also crucial in terms of economic impacts. There are still many uncertainties about the future course of the war and its ramifications. The fundamental question is whether the war is heading in the direction of escalation or de-escalation. Unless the war spreads beyond Ukraine and the conventional means of warfare, its global economic consequences may be limited after the initial shock. New adjustment processes in the field of green and digital transition can be set in motion in parallel with the suffering and turmoil of war shock. New market players could emerge in the energy markets.The prolonged war continues to challenge the Ukrainian economy, but it can remain viable with massive external support. The Russian economy could suffer serious erosion, with its comparative advantage being wasted.There is a real threat of deglobalisation and the emergence of a fragmented world economy, but the counteracting factors appear to be much stronger. However, the prolonged war continues to pose major and unpredictable threats to the countries affected directly and indirectly, to Europe and to the world economy.

Creditor protection and asset-debt maturity mismatch: a quasi-natural experiment in China

ABSTRACT Recently, the Chinese Government has strengthened the enforcement of bankruptcy laws to protect creditors’ rights. This study shed light on the effect of creditor protection on asset-debt maturity mismatch by employing a quasi-natural experiment in China. The results show that creditor protection mitigates maturity mismatch, and the effect is more pronounced among financially constrained firms. Results remain robust after the dynamic effects test, placebo test, propensity score matching approach, entropy balancing method, and controlling for COVID-19 shocks. Mechanism tests show that creditor protection decreases the cost of debt and reduces over-investment. The effect of creditor protection is pronounced in private companies, financially independent companies, and companies with secured loans. Creditor rights can alleviate maturity mismatch in firms with medium ownership concentration and managerial ownership levels. Economic consequences studies suggest that creditor protection reduces corporate default risk. This study reveals the mechanism and effect of creditor protection on asset-debt maturity mismatch in emerging markets, providing recommendations to policymakers for assessing and improving bankruptcy law regimes.

COVID-19 SHOCK: THE SHORT-TERM IMPACT ON THE EUROPEAN AND AMERICAN FINANCIAL MARKETS

The new coronavirus has very seriously shaken the behavior of global financial markets. Globally, the COVID-19 shock is considered severe, even compared to the Great Financial Crisis that took place in 2007-2008. Considering the persistence of the virus, this study is designed to investigate the short-term impact of COVID-19 upon financial markets of Europe and the United States (US) in the entire year of 2020. In the research we used daily data from the period 1st January – 31st December 2020 and linear regression. The stock markets indices selected in the sample were: European stock indices DAX30, FTSE100 and CAC40 and the American stock indices DJI and S&P500. The study’s results showed that there is a significant relationship between the number of new daily cases of COVID-19 and the considered stock market indices. But there is a much stronger correlation between oil prices and stock indices than between the number of COVID-19 new cases and stock indices. We conclude that the market has been intensely agitated at a terrible level. The American, London, French and German stock markets reacted negatively to the increase in confirmed cases of COVID-19 and to the price of oil. So, the market reaction with respect to the number of COVID-19 new daily cases is significant.

Debt maturity structure and corporate risk: an empirical study based on pandemic shock in China

We collected data on the duration of outbreaks in Chinese cities from the websites of National, Provincial, and Municipal Healthcare Commissions as our primary source. Our aim is to investigate the impact of debt maturity structure on COVID-19 shocks. We conducted statistical analyses based on different levels of debt maturity and the severity of the shocks. Subsequently, we empirically tested the mitigating effect of debt maturity structure on pandemic shocks using a fixed-effects model. Our findings reveal that pandemic shocks heighten firms’ business risk. However, extending the debt maturity structure significantly alleviates the impact of these shocks. Robust benchmark results were obtained through instrumental tests employing instrumental variables, PSM-DID, and placebo methods. Mechanism tests demonstrate that extending debt maturity helps in mitigating maturity mismatches, reducing debt financing costs, and alleviating financing constraints. Further analysis indicates that the pandemic mitigating effect of debt maturity structure is more pronounced among firms with lower degrees of marketization and governance, particularly among private firms. Our study contributes to the micro-level understanding of the economic repercussions of major pandemic disasters and enriches research on firm risk from the standpoint of capital structure.

Geography, age, and wellbeing following the COVID-19 shock

Geography, age, and wellbeing following the COVID-19 shock

Interconnectedness in the Corporate Bond Market

Does interconnectedness improve market quality? Yes.We develop an alternative network structure, the assets network: assets are connected if they are held by the same investors. We use several large datasets to build the assets network for the corporate bond market. Through careful identification strategies based on the COVID-19 shock and “fallen angels,” we find that interconnectedness improves market quality especially during stress periods. Our findings contribute to the debate on the role of interconnectedness in financial markets and show that highly interconnected corporate bonds allow for risk sharing and require a lower compensation for risk.

FINANCIAL PLANNING AMONG YOUTH DURING THE COVID- 19 ERA: A LESSON

The lack of money management among youthhas become a growing concern. The issue cannot be solved simply by providing more savings and spending more money on development and management. There is an urgent need for a better understanding of the current and potential role of financial planning in meeting the needs of life, especially when any shock occurs in a country. Thus, adopting a strategic approach needs to be planned and managed so that the youth generation can carry out its function and roles in financial planning. This research aims to study the factors that influence financial planning and money management among youth. Theory of Planned Behavior (TPB) will be used as a baseline to explain the current needs of financial management among youth. Factors like financial literacy, financial attitude and perceived behavioral control were incorporated in this study to see the impact on financial management especially during the economic shock of COVID-19. The results show that the youth generation have a better tendency to manage their financial, in condition they have receive the appropriate financial knowledge form the relevant parties. This knowledge will then form a correct direction of attitude on financial management. Furthermore, the interpretation of how easy it is to control their finance also will depend on the information received. With the result obtained, all parties including the government could do an early preparation in order to equip the young generation with the suitable program hence reducing the problem of high indebtedness.

Analysis of Regional Economic Resilience through Comparative Advantages of Sectoral Growth

The objective of this study is to analyze the economic resilience of regions during the COVID-19 period that affected the Indonesian regional economy. Economic resilience can be identified by examining the development of leading sectors in the regional economy. This study uses secondary data in the form of time series using Gross Regional Domestic Product (GRDP) data obtained from the Central Bureau of Statistics of Batu City, the Central Bureau of Statistics of Malang City, and the Central Bureau of Statistics of Kediri City from 2018 to 2021. All three cities are located in East Java Province, Indonesia. The analysis in this study involves using three methods: Location Quotient, Shift Share, and Klassen typology. The analysis results reveal that Batu City and Malang City show strong competitiveness and comparative advantages. On the other hand, Kediri City demonstrates relatively low competitiveness and comparative advantage, which can be attributed to the impact of the COVID-19 shock. Additionally, research results show that the sectors in Malang City have experienced rapid growth, with all sectors developing faster than in other regions. In contrast, the sectors contributing to Batu and Kediri’s Gross Regional Domestic Product (GRDP) have experienced delayed development. The results of this study confirm that regional economic resilience still exists through the development of sectoral businesses that contribute to the overall value of Gross Regional Domestic Product in various regencies and cities within East Java Province. Keywords: basic sector, resilience, shift share, location quotient, regional economy

Volatility spillover and dynamic correlation between Islamic, conventional, cryptocurrency and precious metal markets during the immediate outbreak of COVID-19 pandemic

PurposeThis paper aims to investigate the immediate effect of the outbreak of the COVID-19 pandemic by investigating volatility transmission and dynamic correlation between stock (conventional and Islamic) markets, bitcoin and major commodities such as gold, oil and silver at different investment horizons before and after 161 trading days of the outbreak of the COVID-19 pandemic.Design/methodology/approachThe MGARCH-DCC and maximum overlap discrete wavelet transform -based cross-correlation were used in the estimation of the volatility spillover and continuous wavelet transform in the estimation of the time-varying volatility and correlation between the assets at different investment horizons.FindingsThe authors observed a sudden correlation breakdown following the COVID-19 shock. Oil (Bitcoin) was a major volatility transmitter before (during) COVID-19. Digital gold (Bitcoin), gold and silver became highly correlated during COVID-19. The highest co-movement between the assets was observed at medium and long-term investment horizons.Practical implicationsThe study findings have a financial implication for day traders, investors and policymakers in the understanding of volatility transmission and intercorrelation in a bid to actively manage stylized and well-diversified asset portfolios.Originality/valueThis study is unique for its employment in estimating the time-varying conditional volatility of the investable assets and cross-correlations between them at different investment horizons, particularly before and after COVID-19 outbreak.

Determinants of Food Inflation in Tanzania: Comparative Analysis Before, During and After Covid-19 Shock

Determinants of Food Inflation in Tanzania: Comparative Analysis Before, During and After Covid-19 Shock

Why co-working spaces in an analogical environment exhibit different recovery abilities under the COVID-19 shock? Evidence from China

Although co-working spaces have attracted significant attention as a type of platform organisation in the sharing economy, little is known about why some spaces faced with an analogical environment demonstrate obvious differences in recovery abilities after sudden shocks, such as the one caused by the COVID-19 pandemic. To understand this novel phenomenon, we collected data from the Chengdu high-tech zone and employed grounded theory and fuzzy set qualitative comparative analysis (fsQCA) to identify the possible causal configurations for high levels of resilience in small and medium-sized platform organisations. Our findings reveal that (1) there are five antecedent configurations that multi-morphologically lead to the same outcome; (2) compared with other antecedent conditions, networking ability and diverse value co-creation with customers play more important roles in the formation of a high level of co-working spaces’ resilience; (3) under certain circumstances, a substitutional relationship exists between industrial experience and communication ability; and (4) when the endogenous factors of organisations (e.g. their abilities and resources) coincide with complex external environments, organisational resilience is expressed. In this manner, our study contributes to the organisational resilience literature and research on co-working spaces. Some practical suggestions for the sustainable development of co-working spaces are also provided.

Perceived impacts of the COVID-19 pandemic: does farm households' capability influence food security resilience in Ghana?

PurposeCOVID-19 which became a global pandemic in 2020 has had tremendous impacts on several sectors including agriculture. Farm household capability is said to play a major role in ensuring that individuals develop some level of resilience towards the pandemic. This study assesses the perceived impacts of the pandemic on livelihood activities and examines the effects of farm household capability on food security resilience.Design/methodology/approachThe factor analysis, 2SLS and RIMA methodology were employed to assess the perceived impacts of the pandemic on livelihood activities and examine the effects of farm households' capability on food security resilience. The study is based on farm households in the Northern region of Ghana.FindingsThe study revealed that on a scale of 0 (no impact of the COVID-19 pandemic) to 1 (high impact of the COVID-19 pandemic), a value of 0.641 was obtained which means that the COVID-19 pandemic had a moderate (average) impact on farm households. Farm household capability also increases the food security resilience of farm households.Practical implicationsGovernment and local leaders should ensure that basic life-sustaining conditions are provided for rural farmers, and farm household capabilities are considered during crises.Originality/valueStudies have examined impacts of the COVID-19 but little or no attention has been given to farm households' capability to remain resilient amid the COVID-19 shocks on livelihoods.