Over a year into the Covid-19 crisis, many of the questions that the Economics Observatory was set up to answer remain critical. Protecting public health and promoting economic health are deeply interconnected – and policy should aim for as much as possible of both.
Newsletter from 1 April 2021
The seed of an idea that grew into the Economics Observatory was first planted and nurtured in a series of conversations exactly a year ago. In the wake of the pandemic, lockdown and what already looked likely to be the deepest recession in living memory, there was a growing sense that the UK’s economic research community should come together to answer questions from policy-makers and the public about the economics of the coronavirus crisis and recovery.
With funding from the Economic and Social Research Council (ESRC) and hosting for the pilot stage by the Institute for Fiscal Studies (IFS), we were able to mobilise the expertise of economists from a wide range of universities and research institutions. At launch just a couple of months later, on 1 June, we published 40 Q&A articles on the website, a number that has since grown to over 275.
Many of the topics we addressed initially were focused on the immediate crisis: what damage would lockdown and recession cause to people’s physical and mental health? How would children and parents cope with school closures? Which firms and industries were being hit hardest? How did the government’s job furlough scheme work? What was being done to protect the most vulnerable? And how might we end up paying for these big public policy interventions?
But we also wanted to explore some long-term challenges raised by the pandemic, the recession and their aftermath: what will happen to big cities if there is a more permanent move to working from home? How can we make up the learning losses suffered by a generation of children? And which policies might be most effective in tackling the high, and highly unequal, impact of the crisis on businesses, jobs, incomes and mental health.
Health and the economy
This week on the Observatory, we’ve come back to an issue at the very heart of the coronavirus crisis: the intricate interactions between public health and economic health – and the many tough choices they imply for policy-makers. First, Aditya Goenka (Birmingham) and Lin Liu (Liverpool) explore the health, economic and ethical decisions surrounding the allocation of limited supplies of Covid-19 vaccines – which groups should be priorities for the first doses.
As they explain, different countries have taken different approaches. Some, like the UK, have focused primarily on protecting the most vulnerable – older people and those most at risk due to pre-existing medical conditions. Others like India and Korea have made a priority of frontline medical staff on the principle that protecting them benefits everyone by ensuring that the healthcare system is not overwhelmed by the pandemic. Still others, such as China, have targeted other key workers – transport crew, military personnel, teachers and social workers – taking the view that their jobs are essential to keep the country running.
Our other new piece this week is also about keeping things on track: in this case the US economic recovery and efforts by the country’s central bank, the Federal Reserve, to provide support via a couple of key shifts in its monetary policy strategy. As outlined by a team of economists at the National Institute of Economic and Social Research (NIESR), the Fed is now more strongly focused on supporting employment. It is also aiming for an annual inflation rate that averages 2% rather than a fixed target of 2%: in practice, this seems to indicate that the current near-term objective is inflation hitting around 2.5%.
With the Biden administration’s $1.9 trillion economic stimulus legislation (the American Rescue Plan) passed earlier this month, a $2 trillion investment programme (the American Jobs Plan) announced yesterday and the latest US jobs report due out tomorrow, the prospects for employment and inflation are hot issues in US policy debate right now.
For a flavour of the controversies, see the writings of former Fed economist Claudia Sahm and of former International Monetary Fund (IMF) chief economist Olivier Blanchard – what Claudia characterises as Team Janet Yellen (Treasury secretary, former Fed chair and Berkeley Economics professor) versus Team Larry Summers (Harvard economics professor and former Treasury secretary).
April is generally a busy time of year for meetings in economic research and policy-making. With restrictions still in place, all will be virtual, but no fewer than five upcoming online events are worth exploring.
Spring Meetings of the World Bank and the IMF (#IMFMeetings), 5-11 April
First up, economic policy-makers from around the world gather to focus on the big challenge: ‘tackling the Covid-19 pandemic of inequality to build a green, inclusive and resilient recovery’. Curtain-raiser speeches are already available to watch from World Bank president David Malpass and IMF managing director Kristalina Georgieva.
Economic History Society 2021 annual conference (#EHS2021), 6-9 April
The annual gathering of the UK’s economic historians features several researchers who’ve written for us on key questions: what can looking back at the past teach us about dealing with pandemics, recessions and related crises? And can it help us think through how best to ‘build back better’? John Turner, one of our lead editors, is managing editor of the Society’s journal, the Economic History Review.
Royal Economic Society 2021 annual conference (#RES2021), 12-14 April
The UK’s annual gathering for economists features lectures by the Society’s two most recent past presidents: Nick Stern, author of the eponymous 2006 report on the economics of climate change and Observatory contributor on the potential role of a national investment bank in recovery from the crisis; and Rachel Griffith, who spearheaded the Observatory’s early stages, remains a lead editor and has written for us on obesity, supermarket prices and whether anyone has been made better off by coronavirus.
Further RES conference highlights include former Bank of England governor Mervyn King and Foreign Office chief economist Rachel Glennerster discussing the state of the UK economy; and economics Nobel laureates Angus Deaton and Jean Tirole in conversation with, respectively, two of our lead editors, Tim Besley and Diane Coyle.
#EconomicPolicy, 15-16 April
The Centre for Economic Policy Research (CEPR) will be hosting the half-yearly meeting of the journal Economic Policy, which this time is devoted exclusively to Covid-19 economics. The standout session is a public debate on the inequality effects of the pandemic, featuring new analysis and policy proposals from Stefanie Stantcheva (Harvard) and Gabriel Zucman (Berkeley), discussed by Rana Foroohar of the Financial Times and Ngaire Woods, dean of Oxford’s Blavatnik School of Government.
Scottish Economic Society 2021 annual conference (#SES2021), 26-28 April
Towards the end of the month, the birthplace of economics hosts the annual gathering of economists in Scotland, including a joint public session with the Observatory on the question: Has devolution led to different outcomes during the Covid-19 crisis? Three of our lead editors – Tim Besley, Huw Dixon and Graeme Roy – will be in conversation with Graham Brownlow (Queen’s University Belfast), Catia Montagna (Aberdeen) and our Bristol colleague Helen Simpson on an issue that may become of even greater significance in the wake of the early May elections across the cities, counties and nations of the UK.
Finally, we are planning our own annual conference, working with the Bristol Festival of Ideas on an event to be in held in person in mid-November. Our intention is to bring together top economists, including our lead editors, with senior policy-makers, practitioners and journalists to discuss where we’ve got to in the coronavirus crisis and look forward to other big challenges, such as devolution, digital technology, food insecurity and climate change.