Pierre-Olivier Gourinchas Summarizes Macroeconomic Effects of Pandemic-Induced Fiscal Stimulus
Most nations adopted expansionary fiscal policies in response to the economic disruption associated with the COVID-19 pandemic, but the extent and nature of these policies differed from country to country. One important source of variation was the extent to which policies were targeted to workers or firms that were particularly hard-hit by shutdowns or reductions in consumer demand. Whether tax and spending programs that are not well-targeted can provide broadly diffused benefits remains an open question. A new study (29293) by NBER researchers Pierre-Olivier Gourinchas of the University of California, Berkeley and Şebnem Kalemli-Özcan of the University of Maryland, along with Veronika Penciakova of the Federal Reserve Bank of Atlanta and Nick Sander of the Bank of Canada, investigates this issue using data from 27 nations. A key finding is that expansionary fiscal policy during the pandemic significantly reduced the failure rates of small and medium-sized businesses. Gourinchas summarizes their findings in the video above. An archive of NBER videos on pandemic-related research may be found here.