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.

On Shareholders and Stakeholders

Click here to read my column in Sunday's New York Times.

Hard To Believe

No matter how bad President Trump gets, he can always get worse.

Ungated version of Post story.

A Podcast Interview

You can hear a recent interview of me by clicking here.

Modules for Introductory Econ

Here is some information for those teaching introductory economics using my favorite textbook.

I have written four modules, or mini-chapters, with optional material that instructors can include in their courses. For instructors using the digital version of the book, these modules can be added for free with a few mouse clicks. As of now, there are modules on the following topics:

• The Economics of Healthcare
• The European Union
• The Keynesian Cross
• How Economists Use Data

I expect to add more modules to the library available to instructors in the years to come.

To get a sense of what these are like, here is a link to an old version of the healthcare module.

For more information about these modules or the book more generally, contact your Cengage rep or John Carey.

The Declining Role of the CEA

According to this article, Tomas Philipson, the acting chair of the Council of Economic Advisers who just resigned, has tested positive for Covid-19. What caught my eye in the article was this sentence:

A White House official told the Journal that Trump and Philipson spent little time together, though the two were seen standing close to each other on June 5 at an event in the Rose Garden.

When I was CEA chair, I was in the West Wing every day and would see the president two or three times a week, typically in the Oval Office or the Roosevelt Room (the conference room adjacent to the Oval). It is not a good sign if the CEA chair spends little time with the president, especially in light of the fact that the nation is now experiencing the deepest economic downturn since the Great Depression. (Philipson's specialty, by the way, is health economics, which might have been useful under current circumstances.)

Eater of Souls?

Source. Click on image to enlarge.

Rap for Econ 101

Some years ago, I plugged some rap songs designed to be used in classrooms for introductory economics. The creators alert me that these songs can now be found here. They also note that the songs on elasticity and regulation are their personal favorites.

Perhaps The Best Campaign Ad Ever

Maskin Lectures

My colleague Eric Maskin will be giving two lectures on voting theory on June 25.  Information here.

What I've been watching

Over the past week, I have watched the six-part HBO miniseries The Plot Against America, which came out in March. It is based on the 2004 Philip Roth novel of the same title and tells an alternative history in which FDR is defeated in 1940 by the fascist-sympathizing Charles Lindbergh through the eyes of a Jewish family living in Newark, NJ. Compelling story, well acted. It is the best piece of television I have seen in years.

Larry Summers Interview

A lot of wisdom here.

Comparing Two Recessions

Job losses during the Great Recession of 2008-2009 were largely permanent job losses. Job losses during the Great Shutdown of 2020 are largely temporary layoffs. The future course of the economy will, of course, depend on the microbiology. But the economy seems well situated for a rapid recovery if testing, treatment, and vaccine development allows it. (Click on image to enlarge.)

An important caveat: The labor force participation rate has experienced a large drop. Perhaps there are many permanent job losers who are classified as not in the labor force because they cannot search during the pandemic.

COVID-19 & the Economy: A Q&A Session

Last week, I gave a webinar on COVID-19 & the Economy. If you missed it, you can get a copy by clicking here.,

Also, my publisher is creating a teaching resource for instructors, Covid-19 and the Economy Webinar: Student Guidance Questions (with Instructor notes). If you would like to receive a copy when it is available, please contact Alexis Cortez at Cengage.

The New Yorker profiles Frank Ramsey

Here.

Velde on the 1918 Pandemic

Bottom line: It led to "a recession of 'exceptional brevity and moderate amplitude.'"

A Reading List

...from my friend, former student, and frequent co-author Ricardo Reis.

AEA Podcast

Here is a podcast interview I did recently for the AEA based on my recent JEL article.

Interview with Jim Heckman

A good read.

A Great Overview

...of the policy implications of Covid-19 modeling by Chris Avery et al.