The economics of wage compensation and corona loans: Why and how the state should bear most of the economic cost of the COVID lockdown
Due to COVID-19, large parts of the world economy are being put on hold by government fiat. We argue that – on efficiency as well as equity grounds – the state should generously support not only labour but also capital costs, the latter through ex ante partially reimbursable, rapidly disbursed ‘corona loans’. The exact criteria for reimbursement can be determined ex post – depending primarily on the sector-level severity of lockdown-induced income shortfalls.
By Jean-Philippe Bonardi, Marius Brülhart, Jean-Pierre Danthine, Eric Jondeau, Dominic Rohner (University of Lausanne)