Levy Economics Institute of Bard College
COVID-19 Special Edition (updated 3/16/2021)
Institute News
Levy Scholars Present at COVID-related Online Events

In the inaugural event of the Institute for Innovation and Public Purpose's (IIPP) virtual series, "Public Purpose in the Time of COVID-19," Senior Scholar Jan Kregel joined Research Associate Stephanie Kelton to discuss macroeconomic responses to COVID-19. Kregel also presented on "Why Stimulus Cannot Solve the Pandemic Depression" as part of the "COVID-19 Pandemic: Policy Failures and Their Impact on the Lives of the People" event, cohosted by the Society for Social and Economic Research (SSER) and International Development Economics Associates (IDEAs). A transcript of his lecture is availble here.

Senior Scholar L. Randall Wray participated in the panel "Financing System Change" at the "Global Leadership in the 21st Century: Strategies for Transformative Global Leadership" conference, hosted by The World Academy of Art and Science in partnership with the United Nations at Geneva. Wray also presented a talk on "Monetary Finance in the Age of Corona Virus: MMT and the Green New Deal," one of several talks in the COVID-19-related "Exit Strategy" workshops hosted by the Economic and Social Research Council's "Rebuilding Macroeconomics" project.

Research Fellow Luiza Nassif Pires was one of several panelists to present at the International Association of Feminist Economics' event, "Feminist Political Economy and COVID-19." Her contribution on "Inequality and COVID-19" explores how inequality is shaping the pandemic's social and economic outcomes.
New Publications
Strategic Analysis | December 2020
What’s Ahead for the Greek Economy?
Dimitri B. Papadimitriou, Christos Pierros, Nikos Rodousakis, and Gennaro Zezza

The COVID-19 pandemic abruptly ended Greece’s fragile recovery and threw its economy into a dramatic contraction beginning in 2020Q2. Institute President Dimitri B. Papadimitriou, Research Associates Christos Pierros and Nikos Rodousakis, and Research Scholar Gennaro Zezza employ the Institute’s stock-flow consistent macroeconomic model developed for Greece (LIMG) to run simulations for a baseline scenario and two alternative policy outcomes, finding the combined effects of the European recovery funds together with an enhanced public job guarantee program will have a more robust impact on growth and employment than the baseline or the recovery funds alone.

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Strategic Analysis | October 2020
When Will Italy Recover?
Dimitri B. Papadimitriou, Francesco Zezza, and Gennaro Zezza

In this Strategic Analysis, Institute President Dimitri B. Papadimitriou, Research Associate Francesco Zezza, and Research Scholar Gennaro Zezza detail the COVID-19 shutdown's impact on business activities in Italy. Using preliminary evidence available for 2020Q3 and incorporating the planned government intervention, they provide a baseline projection for the Italian economy up to 2022. The authors also evaluate the size of the stimulus that would be required to restore economic growth.

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Strategic Analysis | May 2020
Greece's Economy after COVID-19
Dimitri B. Papadimitriou, Michalis Nikiforos, and Gennaro Zezza

This strategic analysis, by Institute President Dimitri B. Papadimitriou and Research Scholars Michalis Nikiforos and Gennaro Zezza, explores the consequences of various assumptions about aggregate demand, producing a baseline projection for Greece's economy and analyzing a more optimistic scenario in which the European Commission's recently announced Recovery Fund materializes. Acknowledging that this would allow increased public consumption and investment, the authors recommend additional measures to alleviate the pandemic shock's impact and help put the economy back on track when the epidemic has died out.

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Public Policy Brief No. 153, September 2020
Multidimensional Inequality and COVID-19 in Brazil
Luiza Nassif-Pires, Laura Carvalho, and Eduardo Rawet

After spending over 6 percent of GDP responding to the COVID-19 crisis, Brazil has suffered among the worst per capita numbers in the world in terms of cases and deaths. In this policy brief, Reseaerch Fellow Luiza Nassif-Pires, Laura Carvalho, and Eduardo Rawet explore how stark inequalities along racial, regional, and class lines can help account for why the pandemic has had such a damaging impact on Brazil. Although they find that fiscal policy measures have so far neutralized the impact of the crisis with respect to income inequality, the existence of structural inequalities along racial lines in particular have resulted in an unequally shared public health burden. Broader policy changes are necessary for addressing dimensions of inequality that are rooted in structural racism.

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Public Policy Brief No. 151, June 2020
Crisis, Austerity, and Fiscal Expenditure in Greece: Recent Experience and Future Prospects in the post-COVID-19 Era
Michalis Nikiforos

Michalis Nikiforos discusses of the relationships between austerity, Greece's macroeconomic performance, debt sustainability, and the provision of healthcare and other social services over the last decade, explaining that the austerity imposed in the name of debt sustainability led to a vicious cycle where each round of austerity led to a deeper recession and, eventually, more austerity. Predicting that the pandemic shock will lead to an explosion of public debt, he suggests policies to address structural imbalances in Greece and throughout the eurozone.

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Public Policy Brief No. 149, April 2020
Pandemic of Inequality
Luiza Nassif-Pires, Laura de Lima Xavier, Thomas Masterson, Michalis Nikiforos, and Fernando Rios-Avila

The costs of the COVID-19 pandemic—in terms of both the health risks and economic burdens—will be borne disproportionately by the most vulnerable segments of US society. In this public policy brief, Luiza Nassif-Pires, Laura de Lima Xavier, Thomas Masterson, Michalis Nikiforos, and Fernando Rios-Avila demonstrate that the COVID-19 crisis is likely to widen already-worrisome levels of income, racial, and gender inequality in the United States. Minority and low-income populations are more likely to develop severe infections that can lead to hospitalization and death due to COVID-19; they are also more likely to experience job losses and declines in their well-being.

The authors argue that our policy response to the COVID-19 crisis must be shaped by a responsiveness to these unequally shared burdens—and that a failure to mitigate the regressive impact of the crisis will not only be unjust, it will prolong the pandemic and undermine any ensuing economic recovery efforts. As the authors note, we are in danger of falling victim to a vicious cycle: the pandemic and economic lockdown will worsen inequality; and these inequalities exacerbate the spread of the virus, not to mention further weaken the structure of the US economy.

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Policy Note 2020/6 | October 2020
Alternative Macro Policy Response for a Pandemic Recession
Jan Kregel

As COVID-19 infection and test positivity rates are once again on the rise in the United States, Senior Scholar Jan Kregel articulates an alternative approach to organizing an economic policy response should a lockdown become necessary—an approach centered on the role of direct social provisioning.

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Policy Note 2020/4 | May 2020
Guaranteeing Employment during the Pandemic and Beyond
Pavlina R. Tcherneva

The ongoing job losses, already numbering in the tens of millions, and the mass unemployment that will remain once the COVID-19 crisis has passed are of our own making, argues Pavlina R. Tcherneva, created by our inability to conceive of policies that protect and create jobs on demand. There is another option: instead of capitulating to a world of guaranteed unemployment, we can demand policies that guarantee employment. During the pandemic, the government can protect jobs by acting as a kind of employer of last resort, while in the post-pandemic world it can create jobs directly via mass mobilization and a job guarantee. In this environment, backstopping payrolls, mass mobilization, and the job guarantee are three different but organically linked policies that aim to secure the right to decent, useful, and remunerative employment opportunities for all.

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Policy Note 2020/3 | April 2020
Immigration Policy Undermines the US Pandemic Response
Martha Tepepa

Research Scholar Martha Tepepa explains how the US response to the COVID-19 crisis will be hindered by its approach to immigration policy. The administration's "zero tolerance" immigration campaign creates a public health risk in the context of this pandemic, and the recent implementation of the "Inadmissibility on Public Charge Grounds" final rule penalizing noncitizen recipients of some social services will further restrict access to treatment and encumber the fight against the coronavirus.

An earlier version of this note appeared as Working Paper No. 950, "Public Charge in the Time of Coronavirus"

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Policy Note 2020/2 | March 2020
Stabilizing State and Local Budgets through the Pandemic and Beyond
Alex Williams

The federal government appears to have abandoned the idea of a coordinated public health response to the COVID-19 pandemic, leaving the entirety to state and local governments. Meanwhile, the economic standstill resulting from necessary public health measures will soon cripple state and local budgets. Alex Williams outlines a proposal for an intragovernmental automatic stabilizer program that would provide a backstop for state and local finances—both during the pandemic and beyond. Without this program, states will be severely constrained in their ability to respond to COVID-19, and balanced budget requirements will force them to cut jobs and raise taxes during the deepest recession in living memory.

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Policy Note 2020/1 | March 2020
When Two Minskyan Processes Meet a Large Shock: The Economic Implications of the Pandemic
Michalis Nikiforos

The spread of the new coronavirus (COVID-19) is a major shock for the US and global economies. Research Scholar Michalis Nikiforos explains that we cannot fully understand the economic implications of the pandemic without reference to two Minskyan processes at play in the US economy: the growing divergence of stock market prices from output prices, and the increasing fragility in corporate balance sheets. The pandemic did not arrive in the context of an otherwise healthy US economy—the demand and supply dimensions of the shock have aggravated an inevitable adjustment process. Using a Minskyan framework, we can understand how the current economic weakness can be perpetuated through feedback effects between flows of demand and supply and their balance sheet impacts.

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One-Pager No. 65, February 2021
COVID Relief and the Inflation Warriors
Yeva Nersisyan and L. Randall Wray

With the unveiling of President Biden’s nearly $2 trillion proposal for addressing the COVID-19 crisis, Democrats appear keen to avoid repeating the mistakes of the Great Recession—most notably the inadequate fiscal response. Yeva Nersisyan and Senior Scholar L. Randall Wray observe that while Democrats are not falling for the “deficit bogeyman” this time, critics have pushed the idea that the increase in government spending will cause inflation. Nersisyan and Wray argue that the current fiscal package should be evaluated as a set of relief measures, not stimulus, and that the objections of the inflation worriers should not stand in the way of taking needed action.

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One-Pager No. 63, April 2020
Are We All MMTers Now? Not so Fast
Yeva Nersisyan and L. Randall Wray

As governments around the world explore ambitious approaches to fiscal and monetary policy in their responses to the COVID-19 crisis, Modern Money Theory (MMT) has been thrust into the spotlight once again. Unfortunately, many of those invoking the theory have misrepresented its central tenets, according Yeva Nersisyan and Senior Scholar L. Randall Wray. MMT provides an analysis of fiscal and monetary policy applicable to national governments with sovereign, nonconvertible currencies. In the context of articulating the elements of that analysis, Nersisyan and Wray draw out one of the lessons to be learned from the pandemic and its policy responses: that the government's ability to run deficits is not limited to times of crisis; that we must build up our supplies, infrastructure, and institutions in normal times, and not wait for the next crisis to live up to our means.

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One-Pager No. 62, March 2020
The Economic Response to the Coronavirus Pandemic
Yeva Nersisyan and L. Randall Wray

As the coronavirus (COVID-19) spreads across the United States, it has become clear that, in addition to the public health response (which has been far less than adequate), an economic response is needed. Yeva Nersisyan and L. Randall Wray identify four steps that require immediate attention: (1) full coverage of medical costs associated with testing and treatment of COVID-19; (2) mandated paid sick leave and full coverage of associated costs; (3) debt relief for families; and (4) swift deployment of testing and treatment facilities to underserved communities.

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One-Pager No. 61, March 2020
A Global Slowdown Will Test US Corporate Fragility
Dimitri B. Papadimitriou, Michalis Nikiforos, and Gennaro Zezza

Institute President Dimitri Papadimitriou, and Research Scholars Michalis Nikiforos and Gennaro Zezza report that the rapidly growing uncertainty about the potential global fallout from an emerging pandemic is occurring against a background in which there is evidence US corporate sector balance sheets are significantly overstretched, exhibiting a degree of fragility that, according to some measures, is unmatched in the postwar historical record. The US economy is vulnerable to a shock that could trigger a cascade of falling asset prices and private sector deleveraging, with severe consequences for both the real and financial sides of the economy.

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Working Paper No. 981, January 2021
What Jobs Should a Public Job Guarantee Provide? Lessons from Hyman P. Minsky
Daniel Haim

Levy MS Candidate Daniel Haim provides a survey of Hyman Minsky’s writings to identify what kind of jobs he had in mind when recommending employer-of-last-resort policies, suggesting they should increase socially useful output, be guaranteed by the public sector on a project-by-project basis at a minimum wage in the places where people need them and taking the people that need them as they are. He proposes policy recommendations to address today’s pandemic-related needs, such as a targeted public job guarantee program to assist in the social provisioning and distribution of food, shelter, and medical services, as well as those appropriate for after the pandemic to bring about a more democratic, sustainable, and socially cohesive economic system.

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Working Paper No. 978, November 2020
Potential Impact of Daycare Closures on Parental Child Caregiving in Turkey
Emel Memiş and Ebru Kongar

Research Associates Emel Memiş and Ebru Kongar estimate the COVID-19 pandemic’s impact on nonparental childcare arrangements in Turkey and the implications for the caregiving time of married parents of preschool-age children. Comparing variations by gender and use of nonparental childcare arrangements, they find that pandemic-induced constraints have widened the already-present gender gap in parental caregiving time.

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Working Paper No. 968, September 2020
The COVID-19 Crisis: A Minskyan Approach to Mapping and Managing the (Western?) Financial Turmoil
Leonardo Burlamaqui and Ernani T. Torres Filho

Writing in May–June 2020, Research Associate Leonardo Burlamaqui and Ernani T. Torres Filho, Federal University of Rio de Janeiro, investigate the COVID-19 pandemic through an extension of Hyman Minsky's financial fragility analysis, building a three-pronged analytical framework that encompasses the interconnected processes of financial fragility, financial instability, and insolvency-triggered asset-liability restructuring processes. Highlighting the key policy interventions and institutional innovations introduced so far, the authors suggest further measures for addressing the forthcoming stages of the financial turmoil.

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Working Paper No. 963, July 2020
The Early Impact of COVID-19 on Job Losses among Black Women in the United States
Michelle Holder, Janelle Jones, and Thomas Masterson

The COVID-19 pandemic seemingly appeared out of nowhere but changed nearly everything. As the pandemic unfolded, industries deemed nonessential were leveled. Many occupations in these industries are low-wage, and women constitute a greater share of America's low-wage labor force than men. Even as some workers were able to do their jobs from their homes, a high proportion of "essential workers" were African American, other people of color, women, and an intersection of these groups—women of color. The goal of this paper is to closely examine the contours, depth, and causes of COVID-19's impact on Black women's employment in the United States through the lenses of both feminist economic theory and stratification economics.

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Working Paper No. 950, April 2020
Public Charge in the Time of Coronavirus
Martha Tepepa

The United States government recently passed legislation and stabilization packages to respond to the COVID-19 (i.e., coronavirus disease 2019) outbreak by providing paid sick leave, tax credits, and free virus testing; expanding food assistance and unemployment benefits; and increasing Medicaid funding. Research Scholar Martha Tepepa asserts that the response to the global pandemic might be hindered by the lassitude of the state and the administration's conception of social policy that leaves the most vulnerable unprotected. The administration's "zero tolerance" immigration campaign poses public health challenges, especially in the prevention of communicable diseases. In addition to the systemic obstacles noncitizens face in their access to healthcare, recent changes to immigration law that penalize recipients of some social services on grounds that they are a public charge will further restrict their access to treatment and hinder the fight against the pandemic.

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New Blog Posts at "The Multiplier Effect"

At the Institute's "Multiplier Effect" blog, our scholars bring you the latest takes on COVID-19's economic and social consequences. Recent posts discuss unemployment and inequality, the increase in domestic violence in households under quarantine, and the economic impacts of nationalizing payrolls.

February 4: The IMF as Deficit Owl? What's Wrong with This Argument by Jan Kregel

December 1: The Pandemic, “Flexible Work,” and Household Labor in Brazil by Luiza Nassif Pires

June 24: The Reserve Bank's Pandemic Predicament by Lekha Chakraborty and Harikrishnan S.

June 2: The Political Economy of Lockdown in India by Harikrishnan S. and Lekha Chakraborty

May 11: Why Stimulus Cannot Solve the Pandemic Depression by Jan Kregel

April 4: What MMT Is, and Why We Should Not Wait for the Next Crisis to Live Up to Our Means by Yeva Nersisyan and L. Randall Wray

April 2: We Need Class, Race, and Gender Sensitive Policies to Fight the COVID-19 Crisis by Luiza Nassif-Pires,Laura de Lima Xavier, Thomas Masterson, Michalis Nikiforos, and Fernando Rios-Avila

March 30: What If We Nationalized Payroll by Pavlina Tcherneva

March 29: Home Quarantine: Confinement With an Abuser by Luiza Nassif-Pires

March 27: The Coronavirus Does Not Discriminate; Unfortunately Our Economic System Does by Thomas Masterson
Media and Web Coverage

As unemployment rates reach levels unseen since the Great Depression, the wealth of America's richest citizens has continued to increase. In a recent interview with ABCNews, Institute President Dimitri Papadimitriou notes that given the "already worrisome levels of income, racial, and gender inequality in the US... we are not 'all in this pandemic together.'"

Citing Research Scholar Michalis Nikiforos' observation that "the record-high stock prices the president routinely touted became disconnected from companies' underlying value," a March 28th Washington Post article by David J. Lynch claims "the pandemic exposed vulnerabilities that had accumulated during a record-long expansion and years of ultralow interest rates—and which now could make it harder to recover from a recession."

The Guardian's April 8th editorial suggests that "what is possible in dealing with coronavirus can be paid for. Money is not the issue." They cite Yeva Nersisyan and Senior Scholar L. Randall Wray's recent assertion in the Multiplier Effect that "the real limits faced by the government before the pandemic hit were far less constraining than the limits faced after the virus had brought a huge part of our productive capacity to a halt" as evidence that "there are more important things to worry about than government debt."

And in their own April 17 op-ed for The Guardian, Nersisyan and Wray stress that Modern Money Theory "is not a prescription, but merely a description of what actually happens," and the current crisis "has clearly demonstrated what should have been obvious already: provisioning society ... is not a financial issue." They suggest we can mobilize our resources in a manner similar to our World War II response, with the hope that "the coronavirus crisis will not be as destructive as the Great Depression, but if there is one thing it should destroy, it's the myth of the deficit."

Because "a viral epidemic, unfortunately, does not just sicken families; it also sickens the economy, and ours is quite vulnerable already," an interest rate cut may not be enough to spur investment and growth as the US formulates its response to COVID-19. In her first of two recent op-eds for MarketWatch, Research Scholar Pavlina R. Tcherneva calls instead for an "aggressive public-health-services mobilization and an economic stabilization package. And that's the job of Congress, not the Fed."

In the second, Tcherneva calls for a wartime-like mobilization of resources, including a federal job guarantee, to ensure the coronavirus pandemic does not lead to a decades of elevated unemployment, suggesting that "only big government, big public investments, and big public-employment programs will ensure a quick bounce back, rather than another protracted jobless recovery," a sentiment she echoes to the New York Times' Peter S. Goodman and The New Yorker's Sheelah Kolhatkar, as well as in several recent interviews. Hear more from her discussion with Bloomberg's financial team, as well as on the Bloomberg Surveillance, Opinion Has It, and Wharton Business Review podcasts, and Hill TV's morning show, Rising.

An assessement of a job guarantee program such as Tcherneva suggests, which directly creates employment in the communities where it is needed while offering $15 per hour and a basic package of benefits, can be found in the Institute's Research Project Report, "Public Service Employment: A Path to Full Employment." The report was recently cited in a Radio New Zealand op-ed supporting a job guarantee as a flexible program that could "be utilized by more people in times of recession and by fewer in prosperous times."

Alexander Williams joins Joe Weisenthal and Tracy Alloway, hosts of Bloomberg's Odd Lots podcast, to discuss how his findings in Policy Note, "Stabilizing State and Local Budgets through the Pandemic and Beyond," can help the already-fragile US economy recover from the effects of COVID-19.

A new study on Brazil by Research Fellow Luiza Nassif-Pires (with coauthors Laura Carvalho and Laura Xavier) demonstrates that comorbidities are more prevalent among Brazilians with low educational attainment, indicating that poor people are more likely to be severely affected by COVID-19. Results of their study have been reported on in the Brazilian press, including Folha de São Paulo and Jornal da Universidade de São Paulo. (all links in Portuguese)

On Friday, May 22, Nassif-Pires will be featured at the International Association for Feminist Economics' (IAFFE) third COVID-19-related online event, "Feminist Political Economy and COVID-19." She will be joined by Jennifer Cohen (Miami University) and Smriti Rao (Assumption College) for a panel to be moderated by Radhika Balakrishnan (Rutgers University). The event, beginning at 11am (EDT), is free to attend but registration is required.

Estimating that private demand could be weak for 18 months or more, Research Associate Stephanie Kelton tells Mehdi Hasan of the Intercept's "Deconstructed" podcast that we must "decrease the amount that people are required to pay out each month and increase what's coming in because that's the only way people are going to be able to hold it together." And in her March 21st op-ed for The New York Times, she explains that "only the federal government, has the means to step up and save the economy," suggesting it "can and should use this opportunity to make ambitious, lasting improvements."

Speaking to Daniel Bush of PBS NewsHour on April 2nd, Kelton noted "we had these extreme vulnerabilities" long before the pandemic exposed them, suggesting that "we don't have the robust social safety nets that many European countries have, and we pay the price for that." Her April 8th interview with Bloomberg's Stephanie Flanders suggests, however, that "in spite of the deficits we have run in the past," we have the policy space to take action.

Quoting Wray, Kelton, and frequent Minsky Conference keynote speaker, former PIMCO Chief Economist Paul McCulley, who asserts that "it's an epic moment in terms of breaking down the orthodoxy of church-and-state separation of the fiscal and monetary authority," The New York Times' Matt Phillips uses MMT to illustrate how we can replace "a few months of American economic activity with a flood of government money."
In This Issue
Institute News: Scholars Present at COVID-related Events
Strategic Analysis: What's Ahead for the Greek Economy?
Strategic Analysis: When Will Italy Recover?
Strategic Analysis: Greece's Economy after COVID-19
Multidimensional Inequality and COVID-19 in Brazil
Crisis, Austerity, and Fiscal Expenditure in Greece
Pandemic of Inequality
Alternative Macro Policy Response for a Pandemic Recession
Guaranteeing Employment During the Pandemic and Beyond
Immigration Policy Undermines the US Pandemic Response
Stabilizing State and Local Budgets through the Pandemic and Beyond
When Two Minskyan Processes Meet a Large Shock
COVID Relief and the Inflation Warriors
Are We All MMTers Now? Not so Fast
The Economic Response to the Coronavirus Pandemic
A Global Slowdown Will Test US Corporate Fragility
What Jobs Should a Public Job Guarantee Provide?
Potential Impact of Daycare Closures on Parental Child Caregiving in Turkey
The COVID-19 Crisis
The Early Impact of COVID-19 on Job Losses among Black Women in the United States
Public Charge in the Time of Coronavirus
The Multiplier Effect
Web and Media Coverage
Read Our Blog
Multiplier Effect
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