An Excellent Idea

From Robert Litan: Once a Covid vaccine is approved, pay people to take it. 

Teaching the Covid-19 Recession

This summer I have been working to prepare the manuscript for the 11th edition of my intermediate macroeconomics textbook, which will be available next year. Of course, the new edition will include a discussion of the current economic downturn and the policy response to it. 

To help those teaching undergraduate-level macroeconomics this year, I have posted a piece of the manuscript at this link. Feel free to distribute it to your students.

News from Amazon

Thank you all. Have a great semester!

A comparison I never expected

"It would be like listing the five top guitarists from the 1960s and not including Jimi Hendrix."

The High Cost of PPP Jobs

Economists have begun to study the effects of the Paycheck Protection Program, on which Congress spent about half a trillion dollars. The results so far do not look good. Chetty et al. write:

We therefore conclude that the PPP had little material impact on employment at small businesses: we cannot rule out a small positive employment effect of the program (of e.g., 3-4 pp on employment rates), but it is clear that the program did not restore the vast majority of jobs that were lost following the COVID shock.

The study by Autor et al. has a more positive tone. But notice this sentence, deep in the bowels of the paper:

Our benchmark estimates imply that each job supported by the PPP cost between $162K and $381K through May 2020, with our preferred employment estimate implying a cost of $224K per job supported.

This estimate of cost per job suggests that the program was not a good use of public funds. I am not surprised. That is why, early on, I suggested that fiscal responses should focus on helping people rather than propping up businesses, as in this proposal of mine.