COVID-19 Shock Research Articles

Investigating the impacts of rainfall, armed conflict, and COVID-19 shocks on women’s household decision-making among partnered women in Burkina Faso

Investigating the impacts of rainfall, armed conflict, and COVID-19 shocks on women’s household decision-making among partnered women in Burkina Faso

COVID-19 lockdowns and associated shocks: Lessons from farming households’ resilience to food and nutrition insecurity in Cameroon

The COVID-19 pandemic posed multifaceted threats to global economies. The lockdowns were exogenous threats to economic activities. This study uses the case of farming households in Cameroon to explore the association between households’ resilience and food and nutrition insecurity during the COVID-19 pandemic. Focus group discussions (FDGs) were conducted to identify the different COVID-19-related shocks and the response strategies implemented by farming households. Information from the FGDs was then exploited to design survey questionnaires. A multistage random sampling procedure identified 249 farming households for an in-depth study. Through econometric modelling techniques, we reveal that COVID-19 shocks adversely affected farming households’ food and nutrition security and reduced households’ resilience capacity. However, existing adaptive capacity and access to basic services significantly contributed to farming households’ resilience. Female-headed and semi-urban farming households were more resilient than male-headed and rural households to COVID-19 shocks. We recommend that policies and interventions that target the enhancement of farming households’ adaptive capacity and improving their access to basic services would be essential for preparedness, response, and swift recovery from unanticipated systemic shocks such as COVID-19.

Analysis of the Current Situation of China's Catering Industry under the Background of Covid 19

Under the attack from Covid-19, there has been a significant drop in Chinese catering industry. This article carefully studied the impact of COVID-19 on China's food business by applying data and literature analysis, in order to properly deal with the shock of COVID-19 and its following effects, as well as to support the stable and healthy growth of the food industry. The new Covid-19 virus has caused a lot of trauma to the Chinese catering industry, causing China's total catering revenue fell below 4 trillion yuan. But at the same time, some companies persisted and even performed better. The aim of this research is to find the reasons for why those companies had operating issues, and find solutions to resolve the problems. Data from different authorized sources is analyzed to find the trend of the changes. Opinions from published articles are also considered and evaluated. As the result of the study, it is concluded that the impact of the new Covid-19 virus on the Chinese catering industry is undoubtedly a big one, but as long as companies have reasonable countermeasures, they can survive the difficulties safely, and even improve the original level. With the development of the epidemic, these enterprises will become more and more mature. Based on this result, the Chinese catering industry should encourage more innovation and technology improvement to survive under such conditions.

Understanding Tourism Resilience amid COVID-19 in China from An Agency Perspective The Case of Hainan

The COVID-19 pandemic is one of the most influential challenges of the 21st century. It has led to a great concern about the security of human mobility. Unlike other crises or disasters in the past, COVID-19 has generated profound social and economic impacts. The tourism industry, in particular, whose development and prosperity are strongly contingent on human mobility, has been significantly hit by the COVID-19 shock. It is thus particularly important to take a closer look at the resilience of tourism. This study takes the case of Hainan a well-known tourism region to analyze how tourism economies respond and cope with the COVID-19 crisis. In China, it is well documented that strong top-down government measures and intervention policies are crucial and irreplaceable, which can timely enable the resilience of the whole tourism industry during the pandemic. Besides the presence of multi-scalar strong government agencies, this paper, therefore, takes a step further to scrutinize how other actors (e.g tourism firms) work with state actors to respond and adapt to COVID-19. This study could be useful or serves as a reference for further researchers to explore the regional economic resilience issue under COVID-19 in China and also in other developing economies. It will also offer possible directions for future research agendas in the area.

The impact of exogenous shocks on the innovation performance of firms in the Caribbean small island economies: Quasi-replication of Paunov (2012)

In this paper, we investigate how exogenous shocks affect firms' innovative activities and also uncover the factors that can support and drive firms' innovation during crisis events. We underpin our conceptual framework on the cyclicality and procyclicality theory views and develop a quasi-replication methodology for Paunov's (2012) study, which used survey data collected by the OECD during the 2008–2009 global financial crisis (GFC) from eight Latin American countries (LAC). We use a new dataset covering 13 Caribbean economies (N = 1979), during the COVID-19 pandemic. Using Probit regression, we confirm that, like the GFC, the COVID-19 shock led many firms to stop ongoing innovation projects, corroborating Paunov's original findings and the procyclicality theory. Nevertheless, as we step-by-step extend the replication methodology we deviate from the original hypotheses and focus on uncovering which elements can support firms' innovation activities during adverse conditions. In doing so we find that funding was important to support new innovation activities during the COVID-19 pandemic and also that the size of firms' R&D department and their investments in product R&D and process R&D enhanced the development of innovations during this exogenous crisis.

COVID-19 shock 2020: impact on foreign and Kuwaiti workers and contrasts with employment, earnings and consumption during normal times

ABSTRACT This paper uses micro-level data from the 2013 official Kuwait Household expenditure survey covering 2961 households; and three 2020 COVID-19 shock-related CEO, labor force and household surveys to juxtapose the consumption profiles of foreign workers in Kuwait. The paper contributes to a growing literature on foreign workers by focusing on foreign workers’ employment and earnings and consumption profiles following the COVID-19 pandemic. The paper compares differential consumption responses of 250 foreign and Kuwaiti households during the COVID-19 shock with profiles that existed during 2013, which was a shock-free year. Moreover, since foreigners represent nearly 70% of the population, OLS regressions were applied to the 2013 microdata and the 2020 household survey to inquire if standard consumption functions deployed in the economic literature hold in the case of foreign households in Kuwait and vets how their consumption responded to income shocks. Our data and empirical analysis corroborate that Kuwait’s foreign community bore the brunt of COVID-19 in terms of employment, earnings and living conditions. Moreover, our results broadly indicate congruence with Friedman’s permanent income hypothesis, and that for given income levels, consumption heterogeneity holds for foreign workers according to age cohorts, giving support to the life cycle hypothesis. The findings carry significant implications to Kuwait’s dichotomous labor markets, and to households’ income and consumption policies especially to Kuwait’s transformative policy to realize sustainable growth.

Supply Chains in Times of Crisis: Evidence from Kenya’s Production Network

Trading relationships between suppliers and buyers play a key role in transmitting both local and international shocks. We use transaction-level data from Kenya to study the relevance of a firm’s domestic network position and links to international supply chains in determining its trajectory during the COVID-19 crisis. We document that firms with high exposure to import and export markets tend to be larger, older, and employ more workers. The specialisation of direct importers, often intermediaries, on international markets made them very vulnerable to the initial COVID-19 shock. Exporters, one-third of whom operate in primary sectors, experienced a less severe decline in sales. We find that both importers and exporters adjust their domestic supply chains in response to international trade shocks — before and during the crisis alike. Sourcing from international markets does not crowd out domestic purchases, while sales abroad and at home can act as substitutes. Diversified domestic supply chains helped firms to mitigate the impact of the COVID-19 crisis and recover more strongly.

Raising Interest Rates for Improving Income

Abstract This paper illustrates a case where an increase of the interest rates improves the economic activity and reduces income inequality. This theoretical exercise deals with a simple model of disequilibrium with accountant identities of budget constraints. In addition, and following previous models, the effect of the COVID-19 shock is considered, by reflecting asymmetric repercussions that increase income inequality. A simple empirical exercise confirms some of the previous results. The proposed explanation is that, for the euro area, this shock has affected more middle-income households such as the retailers harmed by the compulsory lockdown who have increased their debts.

The Influence of OPEC+ on Oil Prices: A Quantitative Assessment

Since 2017, a new coalition of oil producers led by OPEC and Russia (known as OPEC+) implemented production cuts to limit downward pressure on crude prices. The Covid-19 shock led to a temporary collapse of this coalition and to a price war among OPEC+ members, which contributed to the oil price slump that had originally been caused by widespread containment measures. As the oil market balance seems to crucially hinge on the stability of this coalition, we draw on the 2017–2020 experience to assess the effectiveness of OPEC+ in sustaining oil prices. Using a counterfactual analysis based on two complementary structural vector autoregression (SVAR) models, we find that the impact of OPEC+ on the price of oil was small, owing to significant deviations of oil producers from their assigned quotas. On average, without the OPEC+ cuts, the oil price would have been 6 percent (4 USD) lower than observed.

The impacts of working from home on individual health and well-being

Using a novel German linked employer–employee dataset, we provide unique evidence about the consequences of working from home (WfH) on individual health and well-being. During the recent pandemic, this locational flexibility measure has been used extensively to promote health by hampering the spread of the virus and to secure jobs. However, its direct theoretical ambiguous effects on health and well-being as characterized by different potential channels have barely been empirically investigated to date despite WfH’s increasing popularity in the years before the pandemic. To address concerns about selection into WfH in our dataset that is unaffected by the COVID-19 shock, our analysis relies on an identification strategy ruling out confounding effects by time-invariant unobservable variables. Moreover, we explain the remaining (intertemporal) variation in the individual WfH status by means of an instrumental variable strategy using variation in equipment with mobile devices among establishments. We find that subjective measures of individual health are partly affected by WfH, whereas no corresponding effect is present for an objective measure of individual health. In terms of individual well-being, we find that WfH leads to considerable improvement. By addressing the potential heterogeneity in our effect of interest, we find that men and middle-aged individuals particularly benefit from WfH.

Global energy market connectedness and inflation at risk

After the outbreak of COVID-19 and the Russia–Ukraine war, historically high inflation has become a problem that plagues many countries, leading researchers to model and explore inflation dynamics from a conditional mean-based perspective to a conditional quantile-based perspective and examine the inflation distribution’s tail characteristics, also known as inflation-at-risk. Given the rising uncertainty in the global energy market during COVID-19 and large-scale energy supply shocks brought about by the Russia–Ukraine war, this paper first extracts the global energy connectedness index (GECI) based on the MSCI energy index of 29 countries, then incorporates GECI into the quantile regression to characterize the dynamic distribution of inflation. The results show that the predictive effect of GECI on short-, medium-, and long-term inflation dynamics is mainly reflected in upper quantiles of inflation, with heterogeneity across countries. We find that the dynamic distributions of inflation under the impact of major global events are skewed, and there are significant changes in inflation risks. The out-of-sample forecast verifies the validity and forward-looking property of GECI. The results provide practical regulatory tools and decision-making suggestions for policymakers to prevent and respond to high and low inflation risks.

R&D plans, expectations, and uncertainty: Evidence from the COVID-19 shock in Italy

This paper takes advantage of the COVID-19 outbreak to explore the determinants of firms’ R&D choices around an exogenous shock. We make use of unique panel data on 7,800 Italian companies between January –right before the pandemic– and March 2020 –amid lockdown policies. We exploit the short-run revision in firms’ research plans to test the impact of deteriorating expectations and uncertainty on firms’ R&D. In addition to the significant role played by firms’ expectations, we find that preexisting innovative activities significantly shaped the reaction to the general uncertainty shock.

The Virus as Remedy: COVID-19 and the End of the Populist Meta-Crisis

Abstract Understood not only as a challenge to democracy but as a crisis, populism has received widespread attention in both media and academic circles for the better part of the past decade. Yet the outbreak of COVID-19 and its escalation into a pandemic eclipsed the fear of rising populism within weeks: With lockdowns imposed and civil liberties suspended, it lost its menacing character and became a mere background nuisance. This, I argue in this article, is the consequence of a discursive constellation in which there is only room for one dominant crisis – a meta-crisis as I call it – at a time. Populism filled this meta-crisis role for a long while, but the COVID-19 shock redirected society’s attention to a more pervasive and immediate threat. While this does not spell the end of populism, it still marks a notable shift in the relative importance we attribute to it.

Crises, labour market and informality in Brazil: the Covid-19 shock in the light of past dynamics

In this article, we show the magnitude of the impact of the Covid-19 crisis on the Brazilian labour market, especially on informal workers who were the main victims. This result calls into question the validity of the standard model, referred to in our work as a ‘canonical crisis’, which states that the informal economy plays a counter-cyclical role as a shock absorber. A thorough analysis reveals that this mechanism was no longer at work either for the pandemic crisis or for the two previous macroeconomic crises: informal employment recedes in times of crisis. In addition, we shed light on a striking phenomenon: the pandemic triggered an upsurge in the number of discouraged workers. How these individuals excluded from the labour market coped day to day remains under-investigated. Among the shock mitigation strategies, only the emergency transfer programme played a significant compensatory role. The crisis may mark a turning point by showing that informal workers – a hitherto politically ‘invisible’ group – became a focal point of public policy and were able to influence decisions. The government can no longer hide behind the laissez-faire strategy of relying on the informal sector as a safety valve to limit the socioeconomic impacts of crises.

The impact of government subsidies on corporate resilience: evidence from the COVID-19 shock

The impact of government subsidies on corporate resilience: evidence from the COVID-19 shock

The impact of COVID-19 on stock market liquidity: Fresh evidence on listed Chinese firms

This paper examines the impact of the COVID-19 pandemic on the liquidity of Chinese stock market, while accounting for heterogeneity and transmission channels. The analysis incorporates important innovations relative to previous literature. It incorporates both global and national COVID-19 proxies to measure the severity of the pandemic, providing fresh insights into its disruptive effect on the Chinese stock market. While all businesses are expected to experience significant economic losses due to the pandemic, it is important to recognise the effects can vary across firms. Our study as indicates that COVID-19 shocks can have a negative impact on liquidity by influencing three critical factors: earnings dispersion, equity risk premia, and trade credit restrictions. These findings hold substantial importance for both governments and regulators, who should take actions to stimulate stock market liquidity and provide support to affected firms.

Which Crisis Support Fiscal Measures Worked During the Covid-19 Shock in Europe?

We build a comprehensive database that categorizes COVID-19 fiscal measures announcements in 12 European Union countries into 7 distinct spending categories. Through our empirical analysis, we investigate the impact of these support packages on the economy. Overall, the fiscal measures played a crucial role in promoting output recovery without significant inflationary pressures. However, we observed substantial variations across different spending categories. Assistance provided to small and medium enterprises and specific sectors proved to be highly effective in stimulating the output while maintaining inflation. Direct pandemic spending and measures aimed at sustaining employment levels generated substantial output and employment multipliers and enhanced business sentiment without leading to inflationary costs. Conversely, universal help had inflationary effects and transfers to households primarily aroused consumer and business sentiment without producing significant economic impacts.

Enterprise resilience to the COVID-19 pandemic: The role of business environment.

Enterprise resilience captures enterprises' ability to survive and develop under uncertainties and shocks. Taking the shock of COVID-19 as an example, this paper employs a unique firm-level national survey dataset collected from a sample of nearly 40,000 Chinese private enterprises in 2020 to systematically explore the relation between local business environment and enterprise resilience. Our estimation results using ordered probit model indicate that favorable business environment can significantly enhance enterprise resilience and mitigate the shock of COVID-19 on firm performance. Mechanism analysis further shows that enterprises under better business environment generally have greater resilience as the result of timely and effective government support, reliable supply of production factors and logistics service, and lower levels of financial constraints. Our study deepens the understanding of the economic consequences of business environment and also sheds a new light on enterprise resilience enhancement.

Default Clustering Risk Premium and its Cross-Market Asset Pricing Implications

This study examines the market-implied premiums for bearing default clustering risk by analyzing credit derivatives contracts on the CDX North American Investment Grade (CDX.NA.IG) portfolio between September 2005 and March 2021. Our approach involves constructing a time series of reference tranche rates exclusively derived by single-name CDS spreads. The default clustering risk premium (DCRP) is captured by comparing the original and reference tranche spreads, with the former exceeding the latter when investors require greater compensation for correlated defaults at the portfolio level. The fitted DCRP level significantly increased in response to the 2007-9 global financial crisis and remained relatively stable for a period, followed by a gradual decline beginning in 2016. Notably, the COVID-19 shock caused another sharp rise in the DCRP level. Our empirical analysis finds that the estimated DCRP has significant implications for asset pricing, particularly in affecting the investment opportunities available to U.S. stock investors during times of instability in the financial system.

Brexit and Covid-19 Shocks: Investment and Growth among UK SMEs

Brexit and Covid-19 Shocks: Investment and Growth among UK SMEs