Papers

In the United States, COVID-19 triggered a sharp economic downturn. Yet, the ensuing economic recovery was faster and stronger than nearly any forecaster anticipated due in part to the swift, aggressive, and creative fiscal and monetary policy response in the U.S. While the next recession most likely won’t be triggered by a pandemic, the response can be informed by lessons learned from the COVID-19 recession. 

Examines the use and value of nontraditional data sources, such as private payroll service providers and restaurant reservation services.

Examines the role of monetary policy in keeping interest rates low in the wake of a surge in federal borrowing to assess whether a similar increase in borrowing could be repeated in future recessions.

Examines the impact of the pandemic and related policy responses on children.

Looks at the nearly $1 trillion that the federal government provided to state and local governments.

Part I:  Reviews the aid offered those among the roughly 50  million homeowners with mortgages who struggled to make payments because of the pandemic. Part II: Reviews the aid offered those among the roughly 44  million renters who struggled to make payments.

Surveys the newly created federal subsidies and loans provided to businesses in the first year of the pandemic and also examine the additional lending and corporate bond purchases by the Federal Reserve.

Examines the more than $800 billion in cash that was distributed to all but the highest-income households in the three rounds of Economic Impact Payments (EIPs).

Reviews the substantial expansion of UI—supplementing state-provided benefits, expanding eligibility to those not traditionally eligible, and extending the duration of benefits.

Reviews the macroeconomic impact of the breadth of the economic policy responses that produced a recovery that, while stronger than generally anticipated and stronger than those of other advanced economies, has also been accompanied by an unwelcome increase in inflation.

In these Economic Facts, the Hamilton Project reviews recent economic data to provide context for assessing the state of the economic recovery and highlight areas that remain short of a return to normal.

In this proposal Robert Collinson, Ingrid Gould Ellen, and Benjamin Keys propose a plan to support homeowners and renters to stabilize households and housing markets during future economic downturns. Their proposal would create new emergency rental assistance accounts for low-income households; implement an automatic, three-month forbearance period for vulnerable mortgage borrowers in response to elevated local unemployment; and establish a permanent tax credit exchange program that would allow states to exchange tax credits for direct subsidies at a fiscally neutral price when demand from tax credit investors falls.

Wendy Edelberg, Sara Estep, Stephanie Lu, and Emily Moss examine and offer new insights on the recent history of housing policy from the latter half of the 20th century to today, compare homeowner and renter experiences, and analyze housing assistance policies. The authors conclude that to increase housing stability, policymakers should improve housing policies to create better infrastructure and more-inclusive housing programs in addition to supplying additional funding.

In these Economic Facts, Hamilton Project reviews trends in women’s labor force participation and documents how mothers of children under age 13 have changed how they spend their time. These 10 economic facts detail some of the ways in which work, time, and caregiving have changed for mothers with young children from before the onset of the COVID-19 pandemic through 2020 until early 2021.

The COVID-19 pandemic has presented the United States with a set of unique public health and economic challenges. Economically, the crisis has negatively affected businesses, the labor market, and households. In this set of 10 facts, Wendy Edelberg, Kristen Broady, Lauren Bauer, and Jimmy O’Donnell assess the extent of these economic damages and provide an overview of existing policy interventions.  

The COVID-19 pandemic poses an existential threat to small businesses, with more than 400,000 lost since the crisis began. Many small businesses are financially fragile and not equipped to weather a prolonged period of substantially reduced revenues. In this proposal, Steven Hamilton of The George Washington University calls for a significant expansion of refundable tax credits to help support small businesses through this crisis.

The COVID-19 pandemic has taken a disproportionate toll on Black Americans—yet these unequal outcomes are not novel challenges. Bradley Hardy and Trevon Logan outline several pre-pandemic conditions that have impeded Black Americans’ economic security and increased their vulnerability to the current crisis.

In this blog post, Lauren Bauer, Abigail Pitts, Krista Ruffini, and Diane Whitmore Schanzenbach find that Pandemic EBT reduced food hardship experienced by low-income families with children and lifted at least 2.7-3.9 million children out of hunger.

The COVID-19 public health crisis, the economic shock triggered by the pandemic, and public policy, business, and individual responses to the pandemic together have provoked the sharpest and fastest economic downturn in U.S. history. Wendy Edelberg and Jay Shambaugh discuss how the current crisis fits into historic context and what will be the long-lasting economic consequences. 

David Autor and Elisabeth Reynolds ask whether the COVID-19 pandemic has changed the conventional wisdom about automation and inequality in the United States over the past four decades. They make four projections about a rapidly automating post-COVID-19 economy: increasing telework, city de-densification, large-firm consolidation, and forced automation, all of which have significant, negative consequences for low wage workers and economic inequality. 

The economic crisis in the wake of the pandemic is changing the business landscape, exacerbating concerns about the state of competition in the U.S. economy.  Nancy Rose documents how some large, well-positioned firms have dramatically increased their market share, accelerating trends seen prior to the pandemic. 

The economic damages of the COVID-19 pandemic are not being well captured by current labor market statistics that show both permanent damage to employment relationships and labor force attachment as well as a surge of workers who have experienced a temporary loss of work and income. In this essay, Betsey Stevenson of the University of Michigan explores the many ways the COVID-19 recession has affected the labor market, showing that the labor market effects have not been evenly borne across workers and that the scarring effects of this recession will likely lead to high long-term unemployment and weakened labor market attachment for years to come.   

In 2017, over 15 million workers (about 10 percent of the total U.S. workforce) were in alternative work arrangements. In this economic analysis, Ryan Nunn and Jimmy O'Donnell explore the characteristics of these workers, analyze their unique economic outcomes, and assess policy reforms that can help provide more security for these workers.

Slowdowns in the economy are inevitable. While it may be tempting to rely on Federal Reserve policy as a lone response to recessions, this would be a mistake; we know that fiscal stimulus is effective. Rather than wait for a crisis to strike before designing discretionary fiscal policy, we would be better served by preparing in advance. Enacting evidence-based automatic stabilizer proposals before the next recession will help the next recovery start faster, make job creation stronger, and restore confidence to businesses and households.

Automatic stabilizers are designed to expand during an economic downturn and contract during an expansion—providing timely and temporary fiscal stimulus. Boushey, Nunn, O’Donnell, and Shambaugh assess the various policy responses available to the federal government and argues that when well designed, automatic stabilizers can be an effective part of the policy tool kit for responding to recessions. 

Louise Sheiner and Michael Ng investigate the cyclicality of fiscal policy over the past 40 years, finding that fiscal policy has been increasingly countercyclical, with automatic stabilizers providing roughly half the stabilization. By contrast, state fiscal policy has been mildly procyclical. 

Consumer spending, which makes up about 70 percent of aggregate expenditures in the economy, slows sharply during recessions. This slowdown can exacerbate employment losses and reduced production, making a recession even worse. Claudia Sahm proposes automatic direct payments to individuals to support consumer spending when the national unemployment rate rapidly rises. 

Transportation infrastructure investment during economic downturns often occurs too slowly—and in insufficient quantities—to help stabilize the economy. Andrew Haughwout of the Federal Reserve Bank of New York proposes a modification of the BUILD grant program that would automatically fund additional transportation infrastructure investments during recessions.

Low recipiency rates and an imperfect Extended Benefits program weaken the unemployment insurance program’s effectiveness during recessions. Gabriel Chodorow-Reich and John Coglianese propose five reforms to strengthen the automatic stabilization functions of the unemployment insurance system.

The design of the Temporary Assistance for Needy Families (TANF) program prevents it from providing sufficient assistance to families with children during economic downturns and from serving as an effective stabilizer. In order to help TANF better deliver on both these fronts, Indivar Dutta-Gupta proposes ways to change the funding, design, and administration of the program.

The Supplemental Nutrition Assistance Program (SNAP) is both an effective antipoverty program and a natural automatic stabilizer, expanding when the economy is weak and contracting when it is strong. Hilary Hoynes of the University of California, Berkeley and Diane Whitmore Schanzenbach of Northwestern University present reforms to strengthen SNAP’s countercyclical effects.

Work requirements impede SNAP’s dual role as a safety net and automatic stabilizer. This economic analysis provides new evidence about how waivers to these rules functioned during the Great Recession and how the USDA’s proposed rules would have worked had they been in effect from 2007 to present.

The $700 billion U.S. intergovernmental grant system is often poorly targeted to areas that are struggling. Tracy Gordon proposes reforms to Medicaid and other programs that would make federal aid to states more targeted toward struggling areas and more responsive to economic shocks.   

Popular commentary often points to the lower lifetime earnings and longer expected life spans of women relative to men as a reason to be especially concerned about the economic risks women face as they age. Indeed, women aged 65 and older are twice as likely as their male counterparts to live in poverty. Disability and widowhood are major drivers of economic insecurity for women later in life. To reduce the risk of economic insecurity among older women, the authors propose to allow Social Security beneficiaries to forgo some benefits when claiming to finance greater benefits in the event of widowhood, disability, or both. The proposed changes would be voluntary and self-financing.

In this economic analysis, The Hamilton Project evaluates the nation's economic recovery, assessing jobs growth at a national level and examining factors that contributed to the uneven rate of recovery experienced by some regions and demographic groups. Notably, the report assesses the recovery rate by geographic region, gender, race, and educational attainment. 

The experience of the Great Recession reveals important holes in the safety net. In particular, the central cash-assistance program in the United States, Temporary Assistance for Needy Families (TANF), is failing to reach many poor families. In addition, the program does not automatically expand during economic downturns, when the need for the program is likely greatest and when additional consumer spending would be particularly helpful. To strengthen TANF, Marianne Bitler and Hilary Hoynes propose reforms to expand both the program’s reach and its responsiveness to cyclical downturns. They also propose ways to improve its transparency, which will help researchers and policymakers understand how the program works, who it supports, and how effectively it meets its goals. 

In the years following the Great Recession, many economists and policymakers agree that fiscal stimulus was crucial to turning around the faltering economy and helped to save or create millions of jobs. What economists and policymakers do not agree on is whether the stimulus should have been larger, whether it contained the correct mix of tax cuts and targeted government spending, and how it could have best been delivered. In this Hamilton Project policy proposal, Alan Blinder tackles these questions using economic theory and recent evidence from the Great Recession to discuss how fiscal policy can be better designed to mitigate the effects of the next economic downturn.

Between December 2007 and June 2009 the United States experienced the most severe recession in the postwar period. Given the massive human cost of recessions, it is incumbent upon policy makers to assess the policy tools at their disposal and identify those that are most effective at hastening economic recovery during a downturn. In this document, The Hamilton Project describes how different groups of workers were affected by the Great Recession, what works in fiscal stimulus, what could be done differently in future recessions, and the fiscal preparedness of states for the next downturn. 

Helping unemployed workers return to work has long been a policy challenge in the United States, and the urgency of the problem tends to increase during and after economic downturns. In this paper, Adriana Kugler offers three pilot programs to reform the unemployment system by encouraging different ways to return to work. The first program would allow the unemployed to continue claiming benefits while receiving entrepreneurial training and other assistance for setting up a business. The second program would support the unemployed through temporary positions and internships that might lead to full-time jobs. The third program would provide partial benefits to claimants who accept part-time jobs.