On Monday, July 6, 2020, Michael Spence joined the Princeton Bendheim Center for Finance 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.
To respond effectively to the crisis, we need real-time data. Conventional macroeconomic data are out-of-date given the speed of developments. In his presentation, Spence reports on findings from a Luohan Academy study tracking real-time data in about 132 countries. Watch at minute 17:35 on YouTube.
Digital tools can help prevent spread of the virus, but there are real privacy concerns. In most OECD countries, we made relatively little use of digital tracking tools because we decided we can’t solve privacy concerns in real-time. This might have been the right choice, but these countries will pay a price by not being able to track cases as well and as quickly. Watch at minute 22:30 on YouTube.
Real-time data can demonstrate economic and health trade-offs of policy responses. The Luohan Academy measured economic activity (y-axis) versus health status (doubling time of confirmed COVID cases on x-axis). Watch at minute 37:20 on YouTube.
Some observations from their data
In interpreting these graphs, Spence notes while there will always be trade-offs, the following seems to hold more generally: A timely, early response is better than a later one. Movement upward and to the right is better, provided you don’t backtrack.
Data from YouGov suggests some country’s governments gained significant trust during the crisis, while others lost it. Trust increased in Australia, but declined in the U.K. Canada sustained pretty high levels of trust. Trust in government was low in the U.S. and Mexico before the crisis and has remained low. Trust in Italy and Germany is pretty high and higher than in Spain and France.