Follow the link for the full summary: https://markusacademy.substack.com/p/integrating-economics-and-epidemiology

Explore the webinar series: https://markusacademy.substack.com/archive

On March 30, 2020, Ramanan Laxminarayan joined Markus' Academy for a seminar on integrating economics and epidemiology to fight COVID-19 in India and around the world. Laxminarayan is a Senior Research Scholar and Lecturer at the Princeton Environmental Institute and Founder and Director of the Center for Disease Dynamics, Economics & Policy (CDDEP) in Washington, D.C. and New Delhi.

Download the slides here.*

Timestamps: 

[0:00] Markus' Introduction 

[2:50] Beginning of Laxminarayan presentation 

[3:47] How long have we known about this 

[10:23] Human and institutional behavior in the context of epidemics 

[21:00] Building models in real time 

[45:18] Life on the front lines 

[48:22] Audience questions

Follow the link for the full summary: https://markusacademy.substack.com/p/evaluating-us-financial-stabilization 

Explore the webinar series: https://markusacademy.substack.com/archive

On March 26, 2020, Nellie Liang joined Markus' Academy. Liang is a Senior Fellow with the Hutchins Center on Fiscal and Monetary Policy at Brookings and a former director of the Division of Financial Stability at the Federal Reserve.

Download the slides here.*

Timestamps: 

[0:00] Markus' Introduction 

[8:24] Beginning of Liang presentation

[9:05] US COVID-19 response 

[14:00] Authorities for providing liquidity 

[17:02] Overview of intervention types 

[18:05] Overview of asset classes 

[26:18] Asset purchases and repo 

[27:49] Traditional and novel lender of last resort 

[30:47] Credit markets 

[40:41] Macroprudential policies 

[45:05] Mainstreet business lending 

[48:46] Government commitments for systemic policies and government employee growth

Follow the link for the full summary:

https://markusacademy.substack.com/p/covid-19-and-global-financial-markets 

Explore the webinar series:

https://markusacademy.substack.com/archive

On March 19, 2020, Torsten Slok joined Markus’ Academy for its first episode. Slok is the Chief Economist at Deutsche Bank.

Download the slides here.*

Timestamps:

[0:00] Markus’ Introduction

[19:49] Beginning of Slok’s presentation

[21:36] Presentation outline

[24:15] Before the virus

[27:48] The virus

[30:40] Financial market reaction to the virus

[56:12] Fed and ECB reaction

[58:02] Fiscal policy reaction

[1:03:29] Macroeconomic implications

[1:11:42] Audience questions

Follow the link for the full summary: https://markusacademy.substack.com/p/what-it-will-take-to-save-the-economy 

Explore the webinar series: https://markusacademy.substack.com/archive

On April 6, 2020, Olivier Blanchard joined Markus' Academy for a seminar on how COVID-19 has impacted the global economy—and what it will take to recover from this unprecedented crisis. Blanchard is a Senior Fellow at the Peterson Institute in Washington, D.C. and a former Chief Economist at the IMF.

Download the slides here.*

Timestamps: [0:00] Markus' introduction

[6:48] Beginning of Blanchard presentation

[9:09] Phase 1, decreasing the infection rate

[11:03] Phase 2, keeping the infection rate low

[14:16] Developing and emerging markets

[17:59] Infection fighting

[22:24] Disaster Relief

[27:43] Control of aggregate demand

[32:21] Debt sustainability

[36:18] The important fiscal role of central banks

[39:50] Back to developing and emerging markets

[41:23] The role of central banks and international institutions

[45:25] Audience questions

Follow the link for the full summary: https://markusacademy.substack.com/p/how-to-re-start-the-economy-after 

Explore the webinar series:

https://markusacademy.substack.com/archive 

On April 3, 2020, Nobel laureate Paul Romer joined the Princeton Bendheim Center for Finance for a seminar on the economic impact of the COVID-19 pandemic and strategies for re-starting the economy once social distancing measures are lifted. Paul Romer is a Professor of Economics at New York University.

Download the slides here.*

Timestamps:

[0:00] Markus' introduction

[6:08] Beginning of Romer's presentation

[9:33] COVID-19 crisis in relation to the Financial Crisis of 2007-8

[13:16] A more efficient strategy

[24:01] Developing countries

[28:52] Masks, testing and contact tracing

[48:13] Learning from other countries

[51:09] Audience questions

Follow the link for the full summary: https://markusacademy.substack.com/p/the-future-social-and-political-implications 

Explore the webinar series: https://markusacademy.substack.com/archive

On April 10, 2020, Tyler Cowen joined Princeton's Bendheim Center for Finance for a seminar on the future social and political implications of Covid-19. Tyler Cowen is a Professor of Economics at George Mason University and a co-author of the Marginal Revolution blog on economics and economic policy.

Download the slides here.*

Timestamps: 

[0:00] Markus' introduction 

[12:26] Beginning of Cowen's presentation 

[14:58] Public opinion on China 

[17:53] How voters see politicians 

[21:53] Left, right, and center political views 

[31:31] Business world and well-capitalized firms 

[40:02] Deglobalization and less immigration 

[53:19] Social distancing 

[55:05] Which countries/sectors will recover most quickly 

[58:36] United States, rising or falling

Follow the link for the full summary:

https://markusacademy.substack.com/p/an-evaluation-of-the-fed-treasury

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 11, 2020, Jeremy Stein joined Markus' Academy for a webinar, co-hosted by the Princeton Bendheim Center for Finance and the Society for Financial Studies, on the COVID-19 credit programs recently implemented by the Federal Reserve and the U.S. Treasury. Stein is a Professor of Economics at Harvard University and a former member of the Board of Governors of the Federal Reserve.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[16:43] Stein’ presentation begins

[18:14] Why support businesses in the first place?

[24:54] Mnuchin as Bagehot?

[28:53] High-level policy goals: micro and macro

[39:08] Existing program overview

[41:41] Public firm coverage

[47:52] Main Street programs in more detail

[54:25] Hardness of debt claims is a particular worry

[59:40] How to think about the staged-finance aspect

[1:02:41] Summary

[1:05:08] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/the-benefits-of-targeted-policies

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 8, 2020, Daron Acemoglu joined Markus' Academy for a webinar on his paper on the benefits of targeted policies for lifting lockdowns and recovering from COVID-19 (Acemoglu et al., 2020). Acemoglu is a Professor of Economics at MIT.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[7:58] Beginning of Acemoglu’s presentation

[8:45] Background

[9:47] Varieties of heterogeneity

[12:12] What we do

[12:43] Summary of main findings

[16:53] Key equations

[25:13] Parameter choices

[28:18] Optimal uniform policy

[31:36] Optimal semi-targeted policy

[34:26] Optimal fully-targeted policy

[35:28] The Pareto frontier

[37:57] With greater value of life, another interesting contrast

[42:09] Bigger gains with between-group distancing

[43:18] Even bigger gains with testing-tracing

[44:34] Conclusion

[45:20] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/the-future-of-globalization-after

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 4, 2020, Dani Rodrik joined Markus' Academy for a webinar on COVID-19. Rodrik is a Professor of International Political Economy at the Harvard Kennedy School.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[13:34] Beginning of Rodrik presentation

[14:33] Economic overview

[22:55] Making a globalization

[28:37] Different economic globalizations in history

[32:55] The globalization backlash under the gold standard

[34:17] Why global rules? 

[36:01] Almost all policies have cross-border spillovers

[42:08] The limited case for global rules in economics

[50:39] Implications for the kind of globalization we should want

[56:29] Applying the logic to US-China trade

[1:00:31] The four buckets approach

[1:14:52] Conclusion

Follow the link for the full summary:

https://markusacademy.substack.com/p/encouraging-the-development-and-manufacturing

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 1, 2020, Michael Kremer joined Markus' Academy for a webinar on COVID-19. Kremer is a Professor of Developing Studies in the Department of Economics at Harvard University and a 2019 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

[1:06] Markus’ introduction

[10:19] Beginning of Kremer’s presentation

[13:40] Is it worth building large-scale capacity in parallel with trials?

[17:57] Back of the envelope calculations

[21:46] Calculating the optimal number of vaccine candidates

[25:40] Structuring funding

[28:27] Proposed funding structure

[32:39] Calculating required pull funding

[34:48] Pull funding

[35:48] Supply chains: For want of a vial, the vaccine may be lost

[37:09] Could international cooperation be incentive compatible?

[50:01] Innovations to speed vaccine trials

[1:07:19] Conclusion

Follow the link for the full summary:

https://markusacademy.substack.com/p/the-us-response-to-covid-19

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On April 27, 2020, Joseph Stiglitz joined the Princeton Bendheim Center for Finance for a webinar on COVID-19. Stiglitz is a Professor at Columbia University and a 2001 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[10:31] Beginning of Stiglitz’s presentation

[16:46] Background: US was ill-prepared for crisis

[20:47] Objective of government programs

[21:44] Maintaining health

[24:45] Underlying economics

[29:29] Protecting the vulnerable and maintaining workers’ link with workplace

[33:17] Explaining the failure

[36:50] Further problems with PPP

[43:55] Establishing pre-conditions for strong and quick recovery: providing liquidity

[45:22] Three critical risks for the recovery
[53:52] Worries about inflation?
[58:05] Audience questions

Follow the link for the full summary:

https://markusacademy.substack.com/p/covid-19-debt-monetization-and-lessons

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On April 24, 2020, Harold James joined Markus' Academy for a webinar on the history of war financing and lessons for COVID-19. James is a Professor of History and International Affairs at Princeton University.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[17:39] James’ presentation begins

[18:29] Learning from past disasters?

[19:34] Wartime

[21:29] The immediate response

[31:26] Central bank financing

[35:51] Inflation

[36:38] Dramatic changes in relative prices

[39:45] Two contrasting models: UK/US vs. Central Europe

[44:52] Postwar monetary and fiscal management

[46:09] German inflation, 1914-1923

[47:31] Taxation (US)

[50:43] Non-financial corporate debt

[51:56] Longer-term perspectives

[56:55] Exceptionality of 1945-1979 Period

[58:44] Audience questions

Follow the link for the full summary:

https://markusacademy.substack.com/p/capital-flows-to-emerging-market

Link to sign up for the webinar series: 

https://markusacademy.substack.com/

On April 20, 2020, Hyun Song Shin joined Markus' Academy for a webinar on capital flows to emerging market economies. Shin is the Economic Adviser and the Head of Research for the Bank for International Settlements.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction:

[21:23] Beginning of Song Shin presentation

[23:15] Lenders lend to their own currency

[24:06] Private-sector borrowers are subject to the “original sin”

[24:34] Canadian corporate bond issuance

[27:14] Exception is the US and US dollar

[27:32] US Corporate bonds issuance

[28:28] Liabilities side of lenders balance sheet looms into view

[30:40] Audience Questions/Clarifications

[33:46] Lessons from the 1990s EME financial crises

[35:16] Overcoming original sin:

[40:28] Duration measures

[43:18] EME local currency sovereign bond returns, January 2013 - October 2018

[48:40] Advanced economies sovereign bond returns, January 2013 - October 2018

[50:24] Domestic Market Lenders Questions

[53:07] Covid-19 Shock in March

[54:19] Foreign ownership in EME local currency bond markets

[59:50] US dollar and local currency returns vis-â-vis yield changes

[1:00:20] Monetary policy frameworks

Follow the link for the full summary:

https://markusacademy.substack.com/p/international-trade-and-supply-chains

Link to sign up for the webinar series: ⁠https://markusacademy.substack.com/

On April 17, 2020, Pinelopi Goldberg joined the Bendheim Center for Finance for a seminar on how COVID-19 might impact international trade and supply chains. Goldberg is a Professor of Economics at Yale University and a former Chief Economist at the World Bank.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[14:22] Beginning of Goldberg presentation

[17:13] Road map for this talk

[17:51] What is a Global Value Chain

[21:10] Which countries participate in Global Value Chains

[22:10] GVC expansion in the last four decades

[23:28] Transmission Phase

[29:40] Trade, GVCs and Crisis Management

[43:19] Would a national focus solve problems for critical products? 

[47:55] Need for Global Coordination

[53:56] Economic Effects of GVCs

[59:45] The Nature of the Shocks

[1:02:48] Effects on countries depends on where countries are located in the global value chain

[1:05:28] Expected Economic Effects in the GVC Era

[1:07:09] Long Run Implications? 

[1:11:56] Audience Q&A

Follow the link for the full summary: https://markusacademy.substack.com/p/what-covid-19-means-for-inequality

Link to sign up for the webinar series: https://markusacademy.substack.com/

On April 13, 2020, Nobel Laureate Sir Angus Deaton joined Markus' Academy for a seminar on the implications of COVID-19 for inequality and “deaths of despair.” Deaton is a Professor of Economics and International Affairs Emeritus at the Woodrow Wilson School and the Economics Department at Princeton University and a 2015 recipient of the Nobel Prize in Economics. He is the co-author, along with Professor Anne Case, of Deaths of Despair and the Future of Capitalism, now available from Princeton University Press.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[13:06] Deaton presentation begins

[13:41] Background: Synopsis of the book

[17:12] Analogy with deaths from coronavirus? 

[19:43] Evidence and arguments

[26:35] Maybe this recession is different?

[28:44] Effects on life expectancy

[30:31] Deaths: Additions and subtractions

[34:57] Healthcare industry

[39:01] Smith’s “Absurd and Oppressive Monopolies"

[40:42] Healthcare and COVID-19

[42:35] The villain scenario

[43:53] COVID-19 and inequality

[50:28] India

[52:55] Less clear long run

[56:17] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/the-audacity-of-slope-how-fast-a

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 15, 2020, Paul Krugman joined Markus' Academy for a webinar on COVID-19 and the pace of economic recovery. Krugman is Professor Emeritus at Princeton University, the Distinguished Professor of Economics at the Graduate Center of the City University of New York, a columnist at the New York Times, and a 2008 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[13:06] Beginning of Krugman’s presentation

[17:32] Discussion of two recent papers

[19:26] Dynamics coming from labor market search

[28:12] Fed action has contained financial spillover

[34:17] Fast recoveries followed severe monetary tightening; slow followed slumps caused by private sector excesses

[39:20] Slow recoveries followed periods of unsustainable spending, ending in Minsky/Wile E. Coyote ending

[46:19] How does this apply to COVID-19 shock? 

[52:37] Bond market seems to be predicting slow recovery, but has been wrong in the past

[1:08:07] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/public-and-private-spheres-and-the

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On September 24, 2020, Jean Tirole joined Markus’ Academy for a lecture on public and private spheres and the authentic self. Tirole is honorary chairman of the Foundation JJ Laffont at the Toulouse School of Economics (TSE), the scientific director of TSE-Partnership, and a 2014 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

(1:22) Markus' intro on privacy

(5:31) The shift from private to public sphere

(6:56) "Tech elite" can measure our inner feelings

(12:11) Introduction

(14:42) Considerable Lab and Field evidence

(19:32) Outline

(21:18) Consensual behavior

(36:21) Divisive behavior

(53:17) Competition for attention

(55:08) Conclusion

Follow the link for the full summary:

https://markusacademy.substack.com/p/a-q-and-a-on-digital-innovation-privacy

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 27, 2020, Eric Schmidt, Princeton Class of ‘76, joined Markus' Academy for a Q&A on digital innovation, privacy, and cybersecurity. Eric Schmidt is the former chairman and CEO of Google and co-founder of Schmidt Futures.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Technology and society: 0:59Privacy - “free to think”: 9:51Free to speak, fake news: 13:26Algorithms and AI: 25:57Cyber Security: 31:10Innovation: 35:16Money/ payment system: 47:44Regulation/Taxation: 52:12Concluding remarks: 57:54

Follow the link for the full summary: https://markusacademy.substack.com/p/covid-19-can-supply-shocks-cause 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 19, 2020, Veronica Guerrieri joined the Princeton Bendheim Center for Finance to discuss recent research with Guido Lorenzoni, Ludwig Straub, and Ivan Werning on supply and demand shocks resulting from COVID-19.

Download the slides here.*

● A model that takes into account multiple sectors and an incomplete market is necessary to understand how to respond to COVID-19. Economies with multiple sectors and incomplete markets might make Keynesian supply shocks more likely, amplifying the effects of the shock.

● Ultimately, the authors argue the shock caused by the pandemic might have Keynesian demand features. Firm exit and job destruction might trigger changes in aggregate demand that are larger than the shocks themselves, aggravating the recession.

● When we take multiple sectors and incomplete markets into account, we see how important social insurance is in responding to COVID-19. Monetary policy is important, but fiscal policy is crucial — with the right fiscal policy, we may not need to lower interest rates.

● Guerrieri's policy remarks: the fiscal multiplier on government spending may equal 1, unemployment in certain sectors may not be socially inefficient once health externalities are accounted for, and targeted transfers can provide insurance, raise the natural rate, and make public health policy more desirable all at once.

DESCRIPTION:

Follow the link for the full summary: https://markusacademy.substack.com/p/the-economic-impacts-of-covid-19 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 17, 2020, Raj Chetty joined the Princeton Bendheim Center for Finance to discuss new research with John Friedman, Nathaniel Hendren, Michael Stepner, and the Opportunity Insights Team. The new paper uses private sector data to document the real-time impacts of COVID-19 on people, businesses, and communities. Chetty is a Professor of Public Economics at Harvard University.

Download the slides here.*

● Economists often study the effects of shocks with household survey data, but these data have limitations, including time lags, low frequencies, and the inability to be disaggregated. Private sector data addresses many of these limitations, though researchers must benchmark to public sources and protect confidentiality.

● In the first few months of the pandemic, spending fell much more for the rich than the poor, with the bulk of the reduction resulting from a drop in spending on in-person services. Business revenue dropped more severely in high-income areas, suggesting a supply shock rather than a lack of purchasing power.

● CARES Act stimulus increased spending but didn't fill the hole created by the COVID shock. Stimulus checks increased spending among low-income Americans, but the vast majority of the increase was on durable goods, not in-person services. The Paycheck Protection Program (PPP) had limited impact on employment.

● Effects of this shock on employment and inequality may be long lasting and require policy interventions. 70% of low-income workers who had jobs in wealthy parts of Manhattan lost their jobs, and there are potentially big implications for inequality, including in education.

Follow the link for the full summary: https://markusacademy.substack.com/p/global-sovereign-debt-and-the-dollar 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 12, 2020, Kenneth Rogoff joined the Princeton Bendheim Center for Finance to discuss the implications of COVID-19 for global sovereign debt and the dollar.

Rogoff is a Professor of Public Policy and Economics at Harvard University and a former Chief Economist of the IMF.

● Double-dips are common in financial crises, and we should expect one this time around. Looking at 100 past systemic financial crises, more than 40% had a double-dip.

● In emerging markets, there is limited fiscal space and debt restructuring may need to happen in order to handle the health crisis. During crises, private debt often ends up becoming public debt, and emerging markets run into multiple equilibrium and default at much lower thresholds than advanced economies.

● In advanced economies, political considerations will play a major role in how to address outstanding debt. While the market might think governments will trim benefits like social security and treat explicit government debt as senior, that shouldn't be taken for granted—pensioners are a powerful voter base.

● The dollar will remain the dominant currency, but the U.S. could become fragile if foreigners were to ever become wary about holding U.S. debt. Governments should be spending to mitigate the pandemic and recession, treating the crisis like "war financing," but Rogoff argues the idea that there's no cost to high debt is a dream.

Follow the link for the full summary: https://markusacademy.substack.com/p/the-economic-and-social-implications

Explore the webinar series: https://markusacademy.substack.com/archive

On June 8, 2020, Lisa Cook joined the Princeton Bendheim Center for Finance to discuss the economic and social implications of racial disparities in the U.S., with a specific focus on research that examines how violence impacts innovation among black Americans.

Cook is a Professor of Economics and International Relations at Michigan State University and was previously a senior economist in President Obama's Council of Economic Advisers.

Download the slides here.*

● COVID-19 exposed many economic and societal fissures in America, and a common feature of these inequities—from health to wealth gaps to police violence—is systemic racism. There has been a lot of literature on the origins, channels, and implications of systemic racism, but it largely hasn't examined macro inputs and outcomes like innovation and GDP.

● Innovation is a key driver of the economy, contributing to 10% of GDP and, through business investment, driving 20% of GDP.

● In studies on innovation and violence, Cook and co-authors find that violence significantly diminishes innovation and economic activity with persistent effects. Lynchings affected patents of African Americans significantly, and segregation laws hurt the most valuable patents of African Americans—electrical patents.

● As a result of African Americans not being more engaged in the innovation process, we're losing 4.4% of GDP each year, compared to 2.7% for women not being more engaged in innovation. Cook outlines several policy prescriptions, including improving the STEM pipeline, addressing the racial wealth gap, and pursuing structural change to combat systemic racism.

Follow the link for the full summary: https://markusacademy.substack.com/p/the-covid-crisis-was-a-wake-up-call 

Explore the webinar series:https://markusacademy.substack.com/archive

On June 5, 2020, Darrell Duffie joined Markus' Academy to discuss redesigning the U.S. Treasury market after COVID-19. Duffie is a Professor of Finance at Stanford's Graduate School of Business.

In his presentation, Duffie argued that the current design of the U.S. Treasury market creates moral hazard. He outlined a new proposal for transitioning the market from one that runs through dealer balance sheets to one with broad central clearing.

Download the slides here.

● Duffie noted this is the fourth time in the last century that the Fed has had to intervene in the Treasury market. Ultimately, the Fed purchased $1 trillion of treasuries in only three weeks' time, followed by more purchases.

● The Treasury market failure resulted from overwhelmed dealers. Because the market is dealer-intermediated, dealer's balance sheets became over-stuffed. A pipeline effect overwhelmed dealers, even though they were performing their role and expanded intermediation.

● We can expect this market failure to happen again—and perhaps more often. U.S. debt-to-GDP is growing enormously, resulting in more Treasury securities that need to be mediated by the market.

● Duffie's proposal: Treasury market structure based on broad central clearing is preferable. Broad central clearing would 1) improve the safety of settlements in the market, 2) through netting of purchases against sales, reduce the amount of dealer balance sheet needed for a given volume of trade, and 3) allow for the possibility of all-to-all trade in the future.

Follow the link for the full summary:

https://markusacademy.substack.com/p/the-feds-longer-term-challenges-after

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On June 1, 2020, Bill Dudley joined Markus' Academy to discuss the IMF’s perspective on COVID-19. Dudley is a Senior Research Scholar at Princeton University’s Griswold Center for Economics Policy Studies and former President of the Federal Reserve Bank of New York.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[10:48] Four Longer-Term Issues for the Fed

[12:52] The Fed’s Balance Sheet

[23:10] Independence of Monetary Policy

[30:36] The Longer Run Macro Implications

[37:34] The Moral Hazard Problem

[43:20] Other Lessons of the Crisis

[46:59] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/the-great-lockdown-through-the-global

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 29, 2020, Gita Gopinath joined Markus' Academy to discuss the IMF’s perspective on COVID-19. Gopinath is the Chief Economist of the International Monetary Fund (IMF) and a Professor of International Studies and Economics at Harvard University.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[19:48] Truly global crisis

[32:56] Common features of economic impact

[42:08] Financial markets: disconnect?

[45:31] Monetary and Fiscal Policy

[51:08] Next Steps

[55:05] Profound uncertainty about the recovery

[56:07] Policies for the re-opening phase

[1:02:20] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/covid-19-and-the-global-economy

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 22, 2020, Lawrence H. Summers joined Markus' Academy for a webinar on reopening the economy after COVID-19. Summers is a Professor at Harvard’s Kennedy School of Government, a former U.S. Treasury Secretary, President Emeritus of Harvard University, and former Chief Economist at the World Bank.

Timestamps:

[2:05] How to accelerate vaccine invention?

[19:30] Testing

[27:48] How do great powers compete economically?

[40:23] 3 likely future scenarios of US-China relations

[49:39] Free market vs more government? 

[57:56] Speed of recovery and how to pay for current expenditures? 

[1:00:11] Macroeconomic points

[1:12:29] Should governments use COVID to push other agendas? 

[1:24:44] Are there dangers we are ignoring?

Follow the link for the full summary:

https://markusacademy.substack.com/p/covid-19-and-re-opening-the-economy

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On May 18, 2020, John Cochrane joined Markus' Academy for a webinar on reopening the economy after COVID-19. Cochrane is a Senior Fellow at the Hoover Institution at Stanford University and author of The Grumpy Economist blog.

Download the slides here.

Timestamps:

[0:00] Markus’ introduction

[15:04] The dumb reopening

[22:06] Behavioral SIR models

[30:08] Models miss heterogeneity

[33:51] Testing

[42:39] Summer/Fall

[45:27] Policy

[46:44] Macro/finance policy

[58:33] Legacy

[1:04:22] Audience Q&A

Follow the link for the full summary:

https://markusacademy.substack.com/p/covid-19-a-view-from-outside-the

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 24, 2020, Raghuram Rajan joined Markus' Academy. Rajan is Professor of Finance at Chicago Booth, a former Governor of the Reserve Bank of India, and a former Chief Economist of the IMF.

Download the slides here.

Timelines:

Markus Brunnermeier introduction: 0:00Beginning of Rajan presentation: 8:35The economic playbook: 9:23Containment: 12:31Differences between India and Italy: 16:22Why didn't lockdowns work in India: 22:53Problems are exacerbated by mismanagement: 26:34Why shorter lockdown?: 29:07Consequences: 35:53Has the virus spread EM’s economic damage: 38:07What about relief?: 40:56Central banks have stepped up: 42:49With central bank support: 47:54Why so little relief, is it a mistake?: 49:42An alternative approach: 52:27Modest relief: 54:23Repair: 56:24Tepid recovery without further action: 59:07What next for EM’s: 1:01:52Why is India not doing better: 1:05:15What is next for India:1:09:27Q&A: 1:11:18

Follow the link for the full summary:

https://markusacademy.substack.com/p/climate-policy-moving-beyond-ostriches

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On Friday, July 17, 2020, Richard Zeckhauser joined Markus' Academy for Finance to discuss recent research on prudent climate policy. Zeckhauser is a Professor of Political Economy at the Harvard Kennedy School.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Beginning of Zeckhauser presentation: 16:10Prudent climate policy: 22:28Three prongs for climate policy: 23:30Next ten years are last the chance policy: 24:34Basic argument: 26:38Prospects for reversing these trends: 28:02Likely dates of reaching 2° celsius warming: 30:00Likelihood of climate catastrophe is extremely high: 31:15Resources required by policy prong: 32:34Outline of analysis: 33:33Moral hazard concerns: 35:57Approaches to substitute instruments: 39:15Awful Action Alert: 41:38Deleterious Deterrence: 43:42Types of climate policy observers: 49:32Infeasibility and political economy of targets: 51:09Concluding remarks: 54:32Q&A: 55:36

Follow the link for the full summary:

https://markusacademy.substack.com/p/brazils-perfect-storm

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 13, 2020, Arminio Fraga joined Markus' Academy for a discussion of Brazil’s economy leading up to COVID-19. Fraga is a member of the Group of Thirty and the former president of the Central Bank of Brazil.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Beginning of Fraga presentation: 13:50Divergence since 1980: 16:05What went wrong: 18:05Progress since the 90’s: 19:4190’s progress did not last: 22:06Government spending, tax breaks, and debt: 23:35Bolsa Empresário: 24:54Investment and GDP growth: 26:16Brazil just before Covid-19: 28:03Inequality: 28:38Education: 31:06Ease of doing business: 35:53Governance: 37:56 Global competitive index and social mobility: 38:26Government spending: 39:40Perfect storm: 45:57Major risks: 48:20Hope and resistance: 1:00:06Q&A 1:03:02

Follow the link for the full summary:

https://markusacademy.substack.com/p/narrative-economics-and-covid-19

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 10, 2020, Robert J. Shiller joined Markus' Academy for a discussion of narrative economics in light of the COVID-19 epidemic. Shiller is a Professor of Economics at Yale University and a 2013 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Beginning of Shiller presentation: 13:42JSTOR counts of word “narrative” as percent of all articles, by discipline: 17:17Volatility of financial market: 18:22Long time-series on home prices: 19:39Learning from medical epidemiology: 21:19Kermack- McKendrick SIR disease epidemic model: 23:33Flattening the curve: 27:20Epidemics in waves: 27:52Mutations (in virus, narratives) can cause waves of epidemic: 29:06Examples of narrative epidemics: 30:34Percent of articles that mention the “Great Depression” each year: 36:00Technological unemployment: 37:26The future of narrative economics: 39:33Q&A: 41:08

Highlights:

Our social world is driven by narratives. Narratives can spread like epidemics. “Most people do not respond to analytic discussion,” Shiller said. “They like stories.” There are lessons for narratives in the “epidemic curve,” which rises and falls like a bell-shaped curve. Importantly, the contagion rate of stories may increase as the effectiveness of the storytelling improves (more details, etc.).

Narratives about economics drive both big events and individual behavior during those events. As stories spread, ideas can go viral and move markets. We saw this during the Great Depression and other financial crises. After the 2008-2009 crisis, the market crashed but came back strong. One reason for the rally was that a strong narrative about “not losing out on the rise” led many investors to stay in the market when they otherwise might have left.

It’s difficult to predict how narratives will spread, but studying them can help us prepare for and respond to economic crises. Despite availability of digitized text, it’s still difficult to track popularity of narratives. Shiller says we should start collecting information on economic narratives now.

Follow the link for the full summary: https://markusacademy.substack.com/p/tracking-the-global-pandemic-recovery 

Explore the webinar series: https://markusacademy.substack.com/archive 

On July 6, 2020, Michael Spence joined Markus' Academy for a webinar to discuss new data from a Luohan Academy study that tracks the economic recovery from COVID-19 across several countries. Spence is a Professor of Economics at NYU's Stern School of Business and a 2001 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

[17:35] Real-time data tracking across 132 countries

[22:30] Digital tools and privacy concerns in tracking the virus

[37:20] Economic and health trade-offs of policy responses

Highlights:

● China suffered a major contraction, but recovered relatively quickly both economically and health-wise through fast and strict intervention. South Korea, Taiwan and Hong Kong did significantly better than Mainland China.

● Economic contractions in the U.S. and the U.K. were less severe than in New Zealand, but recovery has been slower and falls behind both economically and health-wise.

● In Brazil, the economy hasn't contracted as much economically but the virus isn't under control, and in Africa, dangerous numbers are emerging in Nigeria, South Africa, and Rwanda.

● In interpreting the data, Spence notes that a timely, early response is better than a later one, and that government trust during the crisis varied widely — increasing in Australia, declining in the U.K., and remaining low in the U.S. and Mexico.

Follow the link for the full summary: https://markusacademy.substack.com/p/corporate-debt-overhang-and-covid 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 29, 2020, Arvind Krishnamurthy joined the Princeton Bendheim Center for Finance to discuss a new paper co-authored with Markus Brunnermeier on COVID credit policy. Krishnamurthy is a Professor of Finance at the Stanford Graduate School of Business.

Download the slides here.*

● This crisis is different from the 2008 crisis in many ways, and a main goal of policy should be to avoid economic scarring post-pandemic. Today, supply and demand disruptions have required that the Fed and the U.S. Treasury also prop up the corporate sector, with the goal of preventing scarring that extends beyond the pandemic.

● The COVID recession is straining both large corporations and the SME sector, but efforts to reduce scarring require different policy approaches, since $1 injected into a large corporation has a different effect than $1 injected into an SME.

● For small, owner-run enterprises, the best way to avoid scarring is to provide cheap liquidity, to avoid inefficient bankruptcies and erosion of firm value. Large corporations with low bankruptcy restructuring costs, however, should not be subsidized — directing subsidies to large corporates would enable equity-holders to delay Chapter 11 filing longer than is socially valuable.

● Instead, the Federal Reserve and the U.S. Treasury should create a facility to reduce the direct costs of bankruptcy and to shore up bank balance sheets to reduce indirect costs. The Fed should also act now by switching on the countercyclical buffer and asking banks to raise equity while equity prices are high.

Follow the link for the full summary: https://markusacademy.substack.com/p/the-us-labor-market-during-the-beginning 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 26, 2020, Erik Hurst joined the Princeton Bendheim Center for Finance to discuss a new paper on labor market conditions during COVID-19. Hurst is the Frank P. And Marianne R. Diassi Distinguished Service Professor of Economics at the University of Chicago's Booth School of Business.

Download the slides here.*

● By using ADP data, the authors are able to study employer/employee links across 1/6 of the U.S. workforce, comparable in scale to Bureau of Labor Statistics data.

● The U.S. lost about 20% of employment through mid-April, mirroring BLS data, with more job losses among small businesses. 37% of workers in the bottom fifth of the wage distribution lost their jobs through late April, compared with 9% of workers in the top fifth.

● Employment declines were bigger among women than men, which is different than in typical recessions, and employer or industry characteristics explain very little of this. About two-thirds of employment losses were from "continuing firms" that continued paying some workers, with a lot of heterogeneity in job gains and losses among them.

● The average firm that re-opened is at 40% of its February size, with most returning workers being recalled employees. There's been a lot of talk of rising wages, but the authors find this is entirely due to selection effects — when adjusted for, there is no increase in wages, and employers are actually cutting wages of about 11% of workers.

Follow the link for the full summary: https://markusacademy.substack.com/p/understanding-the-ecbs-pandemic-emergency 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 22, 2020, Philip Lane joined the Princeton Bendheim Center for Finance to discuss the ECB's pandemic emergency purchase program (PEPP). Lane is the Chief Economist of the ECB, a member of the ECB Executive Board, and a former Governor of the Central Bank of Ireland.

Download the slides here.*

● PEPP is different from previous EU QE measures in that its main goal is market stabilization, while the ECB's asset purchasing program (QE) is focused on fighting downside risk to inflation. PEPP is also more flexible in how it can respond.

● There's lots of evidence that PEPP has contributed to market stabilization. According to several measures—including systemic stress, corporate bond spreads, the stock market, and 3-month Euribor rates—the EU has seen significant stabilization. Lane argues sovereign yields are an important indicator for the ECB because they are closely reflected in bank funding and passed onto households.

● Without such aggressive intervention by the ECB and central banks, we would have seen a much bigger amplification of the pandemic shock driven by flight-to-safety capital flows. Still, national and EU fiscal responses are/will be essential.

● New data show that wholesale funding is fickle while retail funding remained stable. Domestic banks provided missing funding to national sovereigns, while institutional investors were the big sellers of bonds in March. By April, the pullback effect dissipated for both less and more vulnerable countries, indicating stabilization.