All
 
|
 
 


Would the lock-down induced economic contraction be a prelude to a major depression?
 
PIIS042473880010521-2-1
DOI10.31857/S042473880010521-2
Publication type Article
Status Published
Authors
Jacques Sapir 
Affiliation: EHESS, CEMI — Centre for the Study of Industrialization Pattern — Robert de Sorbon Centre
Address: Paris, France
Journal nameEkonomika i matematicheskie metody
EditionVolume 56 Issue 3
Pages5-25
Abstract

The coronavirus or Covid-19 epidemic has stricken the imagination. The fear of a total collapse of advanced countries health system gave birth to what has been called the lock-down of major economies. These measures also have a cost. Obviously, the longer would the lock-down situation go, the higher its economic cost. But, at some point, we could have some irreversible consequences as the number of Small or Very Small enterprises going bankrupt could reach a critical mass. One could then ask the question to know if the health emergency linked to epidemic is not paving the way to major an economic crisis, one that could dwarf all other post-1945 crises. The end of the containment is not to simply jump-start the economy. The level of depression experienced during the lock-down situation would be a serious indicator to estimate the duration of the return to a pre-Covid situation. The difficulty in initially estimating the extent of this crisis can be understood. However, various governments clearly underestimated the gravity of the situation, like the French and the Italian ones, until the beginning of April 2020. They also continue for some, like the French government, to underestimate the extent of the recession. We have attempted in this text to produce realistic estimates and in the subsequent paper we are comparing our estimates with others, be they produced by public bodies or by private ones. If the drop in production figures is actually closer to the level of the 1929 crisis, what is new is the speed with which production is almost at a standstill. As with the 1929 depression the number of changes, for the better or for the worse, is to be extremely important.

KeywordsCovid-19 epidemic, economic collapse, lock-down, economic cost, small enterprises, bankruptcy, containment, post-1945 crises, economic crisis.
Received30.07.2020
Publication date04.09.2020
Number of characters68679
Cite  
100 rub.
When subscribing to an article or issue, the user can download PDF, evaluate the publication or contact the author. Need to register.

Number of purchasers: 0, views: 817

Readers community rating: votes 0 

1. Ando A. (1988). Reflections on some recent evidence on life cycle hypothesis of saving. Studies in Banking and Finance, 5, 7–25.
2. Ando A., Modigliani F. (1963). The ‘Life cycle’ hypothesis of saving: Aggregate implications and tests. American Economic Review, 53, 1, 55–84.
3. Arena J.J. (1964). Capital gains and the ‘Life cycle’ hypothesis of saving. American Economic Review, 54, 1, 107–111.
4. Bagnasco A. (1977). Tre Italie. La problematica territoriale dello sviluppo italiano. Bologna: Il Mulino.
5. Banque de France (2020). Point sur la Conjoncture Francaise a fin Mars 2020. Paris: Banque de France. April 8th. Available at: https://www.banque-france.fr/sites/default/files/media/2020/04/08/200407-point_de_conjoncture_banque_de_france_v2a_modele2.pdf 
6. Brainerd E., Siegler M.V. (2003). The economic effects of the 1918 influenza epidemic. CEPR (Centre for Economic Policy Research) Discussion Papers No. 3791. CEPR Discussion Papers.
7. Carter E.H., Means R.A.F. (2011). Liberal England. World war and slump 1901–1939. In: D. Evans (ed.). A history of Britain — Book VII. London: Stacey International.
8. Correia S., Luck S., Verner E. (2020). Pandemics depress the economy, public health interventions do not: Evidence from the 1918 flu. Draft. Federal Reserve Bank of New York, March 30th.
9. Eichenbaum M.S., Rebelo S., Trabandt M. (2020). The macroeconomics of epidemics. Working Paper No. 26882. National Bureau of Economic Research.
10. Feldman G.D. (1966). Army, industry and labor in Germany, 1914–1918. Princeton (NJ): Princeton University Press.
11. Fridenson P., Griset P. (dir.). (2018). L’industrie dans la Grande Guerre. Paris: Comite pour l’Histoire Economique et Financiere de la France.
12. Garrett T.A. (2007). Economic effects of the 1918 influenza pandemic: Implications for a modern-day pandemic. Federal Reserve Bank of St. Louis.
13. Hardach G. (1977). The First World War, 1914–1918. Berkeley, Los Angeles: University of California Press.
14. Hatchett R.J., Mecher C.E., Lipsitch M. (2007). Public health interventions and epidemic intensity during the 1918 influenza pandemic. In: Proceedings of the National Academy of Sciences, 104 (18), 7582–7587.
15. ISTAT (2020). Nota Mensile. Marzo, 3. Roma, ISTAT. April 7th, figure 11, 9.
16. Jorda O., Singh S.R., Taylor A.M. (2020). Longer-run economic consequences of pandemics. Working Paper Series. Working Paper 2020–2009. San Francisco, Federal Reserve Bank of San Francisco. March 30th. DOI: 10.24148/wp2020-09
17. Kahneman D. (1996). New Challenges to the Rationality Assumption. In: K.J. Arrow, E. Colombatto, M. Perlman, C. Schmidt (eds.). The rational foundations of economic behaviour. New York: St. Martin's Press, 203–219.
18. Kahneman D., Knetsch J., Thaler R. (1991). The endowment effect. Loss aversion and statuquo bias. Journal of Economic Perspectives, 5, 1, 193–206.
19. Kendrick J.W. (1961). Productivity trends in the United States. Princeton: Princeton University Press, table A-II.
20. Krasner S. (2002). Globalization and sovereignty. In: D. Smith, D. Solinger, S. Topik (eds.). States and sovereignty in the global economy. London: Routledge, 34–52.
21. Markel H., Lipman H.B., Navarro J.A., Sloan A., Michalsen J.R., Stern A.M., Cetron M.S. (2007). Nonpharmaceutical interventions implemented by US cities during the 1918–1919 influenza pandemic. Journal of American Medical Association, 298 (6), 644–654.
22. McNeil B.J., Pauker A.S., Sox H.Jr., Tversky A. (1982). On the elicitation of preferences for alternative therapies. New England Journal of Medicine, 306, 1259–1262.
23. Milward A.S. (1977). War, economy and society. Berkeley, Los Angeles: University of California Press.
24. Nakamura E., Steinsson J., Barro R., Ursua J.-F. (2013). Crises and recoveries in an empirical model of consumption disaster. American Economic Journal, Macroeconomics, 5, 35–73.
25. OECD. Interim economic assessment (2020). Coronavirus: The world economy at risk. Paris: OECD, March 2nd.
26. OFCE (2020). Evaluation au 30 mars 2020. L’impact economique de la pandemie de COVID-19 et des mesures de confinement en France. Paris. Policy Brief, 65, Mars 30.
27. Romer C.D. (1988). World War I and the postwar depression — a reinterpretation based on alternative estimates of GNP. Journal of Monetary Economics,  22, 91–115.
28. Rosenberg D. (1983). Le principe de souverainete des Etats sur les ressources naturelles. Paris: Librairie Generale du Droit et de la Jurisprudence.
29. Sapir J. (2005). New Approaches of the Individual Preferences’ Theory and Its Consequences. HSE Economic Journal, 9, 3, 325–360 (in Russian).
30. Sapir J. (2020). Les Bases de la Souverainete Economique et la question des formes de sa mise en ?uvre. Studies on  Russian Economic Development, 2, 3–12 (in Russian).
31. Silvestre C. (ed.) (2020). The mother of all recessions has arrived. Milano: The UniCredit Economic Chartbook, Q2-2020, April 2nd.
32. Strange S. (1996). The retreat of the state: The diffusion of power in the world economy. New York: Cambridge University Press.
33. Tversky A. (1996). Rational theory and constructive choice. In: K.J. Arrow, E. Colombatto, M. Perlman, C. Schmidt (eds.). The rational foundations of economic behaviour. New York: St. Martin's Press, 185–197.
34. US Commerce Department. (1986). The national income and product accounts of the United States, 1929–1982. US-GPO. Washington (DC): US-GPO, 87.

Система Orphus

Loading...
Up