Policy choices and compliance behavior in pandemic times

In this paper, we model an evolutionary noncooperative game between politicians and citizens that, given the level of infection, describes the observed variety of mitigation policies and citizens' compliance during the COVID-19 pandemic period. Our results show that different stable equilibria exist and that different ways/paths exist to reach these equilibria may be present, depending on the choice of parameters. When the parameters are chosen opportunistically, in the short run, our model generates transitions between hard and soft policy measures to deal with the pandemic. In the long-run, convergence is achieved toward one of the possible stable steady states (obey or not obey lockdown rules) as functions of politicians' and citizens' incentives.

On the economic growth equilibria during the Covid-19 pandemic

The aim of this paper is to study the effects of the Covid-19 pandemic suppression policies (i.e. containment measures or lockdowns) on labor supply, capital accumulation, and so the economic growth. We merge an epidemic SIS population model and a Solow's type growth model, i.e. we propose a fusion between economics and epidemiology. We show the creation and the destruction of economic growth equilibria driven by the suppression policies and by the severity of the disease. The dynamic stability properties of the equilibria are mainly determined by (i) the stringency of the suppression policies, (ii) the proportion of infected workers, (iii) the recovery rate of workers, and (iv) the economy's saving rate. Thus, economies can fall into the stable equilibrium of the poverty trap if the propensity to save is low and the economic policies that reduce the spread of infection are severe enough with high levels of infection and low rates of illness recovery. Otherwise, with high savings rates and if the suppression policies perform in such a way that infection levels are low and recovery rates are high, then the economies converge towards the equilibrium of high economic growth with capital accumulation. The scenario is rather complex since there is a multiplicity of equilibria such that economies can be in one scenario or another, characterized by stability or (structural) instability, i.e. bifurcation paths. Numerical simulations corroborate our results.

What drives TFP long-run dynamics in five large European economies?

The aim of this paper is to study the long-run cointegrating relationship of TFP in a panel of five large European economies, namely France, Germany, Italy, Spain, and UK. We test whether TFP is determined by the so-called "capital misallocation effects, scale effects, and labor market effects". By considering aggregate data, over the period 1983-2017, we employ dynamic panel cointegration techniques to identify the long-run component of TFP. We get two main results. First, the interest rate, the real compensation and the real exchange rate have a positive impact on TFP. Then, the incidence of temporary employment (a proxy of labor market flexibility) has a negative effect on TFP. Moreover, for robustness, we run a panel VECM to check for causalities among the variables. Notably, this further excercise confirms the existence of a strong and positive long-run relationship between TFP and prices. We conclude that coordinated policies on the issue of interest rate, exchange rate, labour cost and regulation, may allow to reassemble the productivity slowdown puzzle and strengthen the European economic structure.