How COVID-19 Will Increase Inequality in Emerging Markets and Developing Economies

By Gabriela Cugat and Futoshi Narita Emerging markets and developing economies grew consistently in the two decades before the COVID-19 pandemic hit, allowing for much-needed gains in poverty reduction and life expectancy. The crisis now puts much of that progress at risk while further widening the gap between rich and poor. Despite the pre-pandemic gains in […]

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Global Imbalances and the COVID-19 Crisis

By Martin Kaufman and Daniel Leigh The world entered the COVID-19 pandemic with persistent, pre-existing external imbalances. The crisis has caused a sharp reduction in trade and significant movements in exchange rates but limited reduction in global current account deficits and surpluses. The outlook remains highly uncertain as the risks of new waves of contagion, […]

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The COVID-19 Gender Gap

By Kristalina Georgieva, Stefania Fabrizio, Cheng Hoon Lim, and Marina M. Tavares The COVID-19 pandemic threatens to roll back gains in women’s economic opportunities, widening gender gaps that persist despite 30 years of progress. Well-designed policies to foster recovery can mitigate the negative effects of the crisis on women and prevent further setbacks for gender […]

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Fiscal Policies for a Transformed World

By Vitor Gaspar and Gita Gopinath The ongoing COVID-19 pandemic has already prompted an unprecedented fiscal policy response of close to $11 trillion worldwide. But with confirmed cases and fatalities still rising fast, policymakers will have to keep the public health response their No. 1 priority while retaining supportive and flexible fiscal policies and preparing […]

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How is the US doing?

Tyler Cowen linked to a tweet that mentioned the fact that:

On a per-capita basis, of the European majors only Germany has done better than the US in death rate

The “European majors” include Spain with 46.8 million people but not Poland with 37.8 million.  So the cutoff seems to be a rather arbitrary 40 million people.

Let’s start with a list compiled by Worldometer, which includes 215 “countries” (actually entities.)

The US shows up 9th in Covid-19 deaths per capita.  Only 8 of 215 countries are worse.  But obviously that’s just a first pass, and is just as arbitrary as the tweet.  So I’ll look at the data from a variety of perspectives, and reach a VERY tentative conclusion.

1. Many of the countries are tiny.  If we exclude places with fewer than 5 million people (roughly the population of Denmark, Norway, Finland or New Zealand), then we have 122 countries, 6 of which did worse than the US.  That doesn’t look good for the US.

2.  There are likely some other countries that are actually doing worse than us, but have underreported deaths.  Mexico is an example.  On the other hand, for various reasons I believe the US would be fairly near the top in death rates with an accurate list.  First, most countries have death rates far below the US level.  Second, most countries don’t underreport deaths as much as Mexico.  And third, even the US likely underreports Covid-19 deaths, relative to places like Belgium. I believe we’d probably still be top 15 on an accurate list.

3.  It’s also a dynamic process.  We are gradually catching up to places like France, but others below us (like Brazil) are gradually catching up to us.

4.  It’s not clear why the “European majors” are the right comparison group for the US.  Yes, we are a big country, but places like The Netherlands are far, far more densely populated than the US.  Parts of the US that have closer to Western European population density (say Massachusetts or New Jersey) have outcomes that are much worse than most of Europe.  Of course there are also parts of Europe like Milan and Madrid that are far worse than the European average.  So you have a real apples and oranges problem in deciding how to compare.

5.  It’s not clear why a place like Spain is a better comparison to the US than Japan, Australia or Canada.  If race/culture is somehow the issue, then Canada and Australia might be best.  Some people point out that the US isn’t doing much different from Canada, if you exclude the northeastern US.  But if you remove Quebec, then the rest of Canada is doing far better than the US outside the Northeast.  Again, the apples and oranges comparisons are tricky.  What is the right set of countries or regions?  Is climate decisive?  Density?  Exposure to BCG vaccines?  Percent elderly?  Without a model, it’s hard to know how the US is doing.  I live in suburban Orange County, and feel that it’s much easier for me to avoid the virus than if I lived in a dense European city.

Finally, it’s important to be consistent in your approach.  You do NOT want to make both of these two arguments:

1.  The early failures in places like Sweden and New York were not costly, as herd immunity is the inevitable endgame everywhere.

2.  Outside the Northeast, things aren’t so bad.  Thus the US isn’t doing that bad.

If the first argument is true, then the second argument is kind of pointless.  If herd immunity is the endgame, then all of the US will eventually be hammered as hard as the Northeast.  (I don’t expect that to happen, BTW.)

This issue inevitably becomes politicized, and I see people on both sides who cherry pick data and arguments, and ignore data points that conflict with their preferred analysis.

A year from now we’ll have a much better idea of how the US did.  If by the time that an effective vaccine or drug comes along the US ends up with 160,000 dead, then the implications for our policy response will be vastly different from if we end up with 500,000 dead.  That’s because if we end up with 160,000 dead then we’ll know that herd immunity was not the endgame, and in that case the high death toll in April and May will seem like a very costly policy error.  If we end up with 500,000 dead then it will seem possible that the early mistakes were not that consequential; herd immunity was the only practical endgame.  (I say “possible” because even then you’d need to look at the endgame in places like Australia.)

In my view, both the US and 4 of 5 European majors had a poor response to the crisis.  But I understand how people would disagree with me—it’s hard to prove either way.

PS.  This post is not primarily about President Trump.  I am describing the response of 330 million American people to the virus, including me, the FDA, the CDC, Trump, Governor Cuomo, and people who refuse to wear masks in crowded stores.

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Financial Conditions Have Eased, but Insolvencies Loom Large

By Tobias Adrian and Fabio Natalucci Amid the human tragedy and economic recession caused by the COVID-19 pandemic, the recent surge in risk appetite in financial markets has caught analysts’ attention. After sharp declines in February and March, equity markets have rallied back, in some cases to close to their January levels, while credit spreads have narrowed significantly, […]

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