New paper accepted for publication in the European Economic Review

The paper Measuring Sectoral Supply and Demand Shocks during COVID-19 was accepted for publication in the European Economic Review. This is joint work with João Duarte and Miguel Faria-e-Castro. The on-going COVID-19 outbreak and subsequent health policy response have caused wide-spread disruption in most economies. On one hand, authorities around the world have enforced containment and mitigation measures that entailed the supervised shutdown of entire sectors of their economies. On the other hand, in face of health safety uncertainty, agents voluntarily self-impose social distancing. There are many aspects that make studying this combined shock interesting. First, its unprecedented and unexpected nature. Second, the fact that it combined features that are traditionally associated with both demand and supply shocks. Third, the fact that its effect across sectors in the economy was extremely heterogeneous, with some industries shutting down almost completely (such as movie theaters), while others potentially benefiting from increased demand (such as general merchandise retailers). For many, it is not clear whether this is mostly a demand or a supply shock. You can access the latest version of the working paper here, or the version published in the CEPR Covid Economics: Vetted and Real-Time Papers here. The shocks estimated in the paper as well as the time series used can be accessed here. Referred to in the Financial Times, on Martin Sandbu’s Free Lunch column (click here if you don’t have access). The final version at EER is available here.