What Policy Combinations Worked? Bank Lending During Covid-19
In response to COVID-19, countries frequently adopted multiple types of policies to address the economic
and financial effects of the pandemic. This paper analyzes the impact on bank lending of combinations or
packages of policies (fiscal, monetary, and prudential) adopted across a broad sample of countries. Using
a comprehensive policy announcement level dataset together with bank level information, we find that
lending grew faster at banks in countries which announced large packages combining fiscal, monetary, and
prudential measures (“All-out” packages), especially when uncertainty was high. Both the scope and size
of policy packages were important: packages combining all three types of policies, but where only some
were large, were relatively less effective in enhancing credit. The impact was stronger among more
constrained banks with low equity levels. “All-out” packages also increased liquidity for bank dependent
firms but did not disproportionately benefit unviable firms.
E-commerce during Covid in Spain: One “Click” does not fit All
The share of e-commerce in total credit-card spending boomed during Covid in Spain. In particular, women, youth, and urban consumers used e-commerce proportionally more during the pandemic, especially for services. Using a unique proprietary dataset on credit card transactions, we test conjectures about consumers’ behavior (based on fear, hoarding, or learning) during Covid. Overall, e-commerce share reverted to its pre-Covid trend as the pandemic waned. However, some consumers with lower pre-Covid e-commerce usage tend to permanently use more e-commerce, supporting the conjecture of “learning by locking” for these individuals.
Measuring U.S. Core Inflation: The Stress Test of COVID-19
Large price changes in industries affected by the COVID-19 pandemic caused erratic fluctuations in the
U.S. headline inflation rate. This paper compares alternative approaches to filtering out the transitory
effects of these industry price changes and measuring the underlying or core level of inflation over 2020-
2021, the height of the pandemic. The Federal Reserve’s preferred measure of core, the inflation rate
excluding food and energy prices, performed poorly over that period: it was almost as volatile as headline
inflation. Measures of core that exclude a fixed set of additional industries, such as the Atlanta Fed’s
sticky-price inflation rate, were less volatile, but the least volatile were measures that filter out large price
changes in any industry, such as the Cleveland Fed’s median inflation rate and the Dallas Fed’s trimmed
mean inflation rate. These core measures followed smooth paths, drifting down when the economy was
weak in 2020 and then rising as the economy rebounded.
Tracking Economic and Financial Policies During COVID-19: An Announcement-Level Database
We introduce a new comprehensive announcement-level database tracking the extraordinary
fiscal, monetary, prudential, and other policies that countries adopted in response to Covid-19. The database
provides detailed information, including sizes where available, for 28 granular policies adopted by 74 countries
during 2020. About 5,500 policy measures were announced during this period. Importantly, the database is
organized and presented in a format easy for researchers to use in empirical analyses. Announcements were
highly correlated across the broad fiscal, monetary, and prudential categories and at more granular levels.
Advanced economies (AEs) introduced larger fiscal measures than emerging and developing economies
(EMDEs) and relied primarily on large unconventional monetary policies. Bank capital requirements were relaxed
widely in both AEs and EMs, while relaxation of provisioning requirements was more common among EMs.
Supervisory expectations and reporting requirements were widely relaxed.