Paul De Grauwe at the London School of Economics: ‘There is still so much uncertainty about the nature of Omicron that very little can be said about its implications for the economy.’ Lubos Pastor at Chicago adds: ‘Will depend on how deadly Omicron will turn out to be. If the outcome is bad, then the variant (not uncertainty) will hit the economy.’Īmong the plurality of experts who say they are uncertain, several comment on our lack of knowledge about the new variant. PNAS 2020 on economic effect of Covid-19 in Sweden in the absence of restrictions.’ Similarly, Robert Shimer at Chicago, one of a handful of respondents who disagrees, comments: ‘Uncertainty about Omicron will be resolved within weeks. Jose Scheinkman at Columbia also alerts us to research indicating that economic contraction is caused by the virus and occurs regardless of social distancing laws: ‘ See Sheridan et al. But fear is the main driver of economic damage, not lockdown’, adding a link to his Journal of Public Economics study with Chad Syverson of the potential drivers. This should have significant present value effects.’Īustan Goolsbee at Chicago explains: ‘Just depends on how sick it makes people. Larry Samuelson at Yale notes: ‘Covid consumes resources and affects behavior, even apart from explicit restrictions, with detrimental economic effects.’ And Jan Pieter Krahnen at Goethe University Frankfurt comments: ‘Omicron tells us that the pandemic is here to stay for much longer. Others who agree outline possible mechanisms. Overall, across both panels, 3% strongly agree, 44% agree, 49% are uncertain, and 4% disagree.Īmong the short comments that the experts are able to include in their responses, Christopher Udry at Northwestern, who strongly agrees with the statement, says: ‘I’m not sure of the timing, but as long as there is uncertainty about or confirmation of a health threat, activity will be slow.’ Nicholas Bloom at Stanford, who agrees, remarks: ‘It will be a hit, but not sure what “significant” means – I might think 0.1% to 0.5% of GDP, which is something but not huge.’ Among the European panel (again weighted by each expert’s confidence in their response), 52% agree, 43% are uncertain and 5% disagree. Weighted by each expert’s confidence in their response, 6% of the US panel strongly agree, 37% agree, 54% are uncertain, and 3% disagree. On the first statement about the likelihood of Omicron causing significant further damage to economic activity, just under half of respondents express uncertainty while a slightly smaller share agree. Potential economic effects of the new variant Of our 43 US experts, 42 participated in this survey of our 48 European experts, 34 participated – for a total of 76 expert reactions. In early December, we asked the experts whether they agreed or disagreed with the following statements, and, if so, how strongly and with what degree of confidence:Ī) Even without renewed Covid-19 restrictions, uncertainty about the health threat from the Omicron variant is likely to deliver a significant hit to economic activity from now through the first half of 2022.ī) If world vaccine supply continues to be limited, global social welfare would rise by more if those vaccines were made widely available across Africa (with support for effective delivery) rather than accelerating booster vaccinations in rich countries.Ĭ) Imposing travel bans on countries where new Covid-19 variants are discovered will make it less likely that countries will reveal new variants to the rest of the world.
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