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A Literature Review on Economic Policy Response to Covid-19

Summary:
An excellent review of empirical findings regarding the various provisions is contained in this FEDS Notes article, by Elena Falcettoni, and Vegard Nygaard. The COVID-19 pandemic has kept economists busy analyzing many aspects of economic side of the coronavirus impact. This note is meant to present an overview of what economists have analyzed regarding the implications of two of the main components of the CARES Act that affect individuals: the increased UI benefits and the stimulus checks. We present the findings from the literature on these two policies with an eye on potential future governmental interventions. Taken together, these two components have been effective at providing stimulus and lowering poverty. In the aggregate, Kaplan et al. (2020) (PDF) find that the initial UI

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An excellent review of empirical findings regarding the various provisions is contained in this FEDS Notes article, by Elena Falcettoni, and Vegard Nygaard.

The COVID-19 pandemic has kept economists busy analyzing many aspects of economic side of the coronavirus impact. This note is meant to present an overview of what economists have analyzed regarding the implications of two of the main components of the CARES Act that affect individuals: the increased UI benefits and the stimulus checks. We present the findings from the literature on these two policies with an eye on potential future governmental interventions.

Taken together, these two components have been effective at providing stimulus and lowering poverty. In the aggregate, Kaplan et al. (2020) (PDF) find that the initial UI benefits and stimulus payments boosted aggregate consumption by 2 percentage points, while Bayer et al. (2020) show that the CARES transfers reduced the output loss due to the pandemic by up to 5 percentage points.

Complete note here.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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