Special Covid-19 Series, Issue #43

Autore : Action Institute

Data: 02-08-2021

Tipo: Other

Tematica: Action Institute

Hello, Action Institute Community!

While the COVID-19 pandemic is hurting the global economy, we at Action Institute aim at delivering a whole-rounded perspective, cutting through the noise.
Our weekly Special series approaches the effects of the virus from different perspectives: from medical facts to health policy, from economic policy to macroeconomic issues, from politics to financial markets, from technology to the impact on businesses, and more. We encourage our esteemed readers to provide us with feedback and suggestions.

This weekly issue proposes a selection of papers and articles focused on (i) Macroeconomic issues and (ii) Economic Policy.




“Economics has never been a science – and it is even less now than a few years ago.”, Paul Samuelson



 “The pandemic cut annual FDI flows by one-third” (Economist, June 21st, 2021). The COVID-19 pandemic has taken a heavy toll on global economic activity. Foreign direct investment (FDI) is no exception. Last year flows of FDI dropped by one-third from $1.5trn in 2019 to $1trn  according to an annual report by the United Nations Conference on Trade and Development (UNCTAD). UNCTAD worries in particular that the pandemic has hurt FDI in sectors where poor countries need it most: water, sanitation, health, transport, energy infrastructures, agriculture, and education.

 “Eurozone economy edges back towards pre-pandemic norms” (FT, Valentina Romei, June 22nd, 2021). Eurozone economists agree that expenditure levels are going back to a form of normality and are doing so at a fast pace. Consumers are back at attending bars and restaurants and at booking holidays. Indeed, though in June 2019 European flight traffic was twice the current figure, last month the highest number of airplane tickets sold was registered since the beginning of the pandemic. On top of that, employees are travelling to work again boosting public transports use and diminishing web conferencing traffic.

 “Fears for the future: Saving dynamics after the Covid-19 outbreak” (, Valerio Ercolani, Elisa Guglielminetti and Concetta Rondinelli, June 26th, 2021). During the pandemic, households’ savings increased in most of the advanced economies worldwide due to reduced consumption possibilities, fear of contagion, heightened precautionary attitude. The article addresses the issue exploiting data from the Bank of Italy to break down these saving patterns since the COVID-19 outbreak. It is found that the heightened precautionary attitude could last longer than the pandemic and slow down the decumulation of savings piled up in 2020-21.

 “Remittances: One more thing that economists failed at predicting during COVID-19” (Brookings, Dany Bahar, July 1st, 2021). Diverging from expectations, the global flow of remittances during 2020 reached about $540 billion, falling only about 2 percent short of the 2019 record high. On top of that, remittance inflows into Latin America and the Caribbean actually grew by about 6.5 percent in 2020. Ex-post explanations of why COVID-19 did not negatively affect the global record of remittances as predicted dwell on the counter cyclical nature of such flows and on immigrants’ economic resilience.




“Economists agree about economics – and that’s a science – and they disagree about economic policy because that’s a value judgment.”,
Franco Modigliani



 “Money allocation is not the key to recovery and resilience, reforms are” (CEPS, Jorge Nunez Ferrer and Francesco Conti, June 24th, 2021). Expectations regarding the impact of national recovery and resilience plans are high, and to a large extent unrealistic. The list of requirements on the national programmes from the Commission guidelines reflects the political pressure on the EU institutions to ensure that all Green Deal matters are addressed. As a result, the national plans are very diverse in the approaches taken, and difficult to compare and analyse. The core objectives may often be lost among the large number of other objectives. It is important to recall the key objectives: recovery, resilience and reforms – the focus of this commentary.

 “How to assess the costs and benefits of lockdowns” (Economist, July 3rd, 2021). Lockdowns both damaged local economies and saved thousands of lives: striking a balance between the two is essential for policy-making purposes. The article summarizes different strategies that have been adopted to evaluate costs and benefits on the basis of how stringent lockdowns were. Most differences in cost-benefit calculations are related to disagreement over the VSL and depend on changing social norms and perception. All in all, the malleability of cost-benefit analysis hints at the true answer of whether lockdowns were worth it.

 “Beyond the pandemic: From life support to structural change” (, Maarten Verwey, Mirko Licchetta and Alexandru Zeana, July 8th, 2021). COVID-19 caused a never-seen-before recession, which demanded an unprecedented economic policy response in the EU. As the European Commission’s Summer 2021 Economic Forecast points to a quick return to the pre-pandemic output levels, attention shifts to the post-pandemic years. The first set of National Recovery and Resilience Plans will give an anticipatory taste of European economic prospects in the long run.


Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.

Herbert Hoover […]


Good health is essential to social and economical development and it empowers all of the public sectors.

World Health Organization […]


Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Peter Drucker […]

Human Capital

Talent is a source from which water flows constantly renewed. But this source loses its value unless it is properly used.

Ludwig Wittgenstein […]