Follow the link for the full summary:

https://markusacademy.substack.com/p/public-and-private-spheres-and-the

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On September 24, 2020, Jean Tirole joined Markus’ Academy for a lecture on public and private spheres and the authentic self. Tirole is honorary chairman of the Foundation JJ Laffont at the Toulouse School of Economics (TSE), the scientific director of TSE-Partnership, and a 2014 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

(1:22) Markus' intro on privacy

(5:31) The shift from private to public sphere

(6:56) "Tech elite" can measure our inner feelings

(12:11) Introduction

(14:42) Considerable Lab and Field evidence

(19:32) Outline

(21:18) Consensual behavior

(36:21) Divisive behavior

(53:17) Competition for attention

(55:08) Conclusion

Follow the link for the full summary:

https://markusacademy.substack.com/p/a-q-and-a-on-digital-innovation-privacy

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 27, 2020, Eric Schmidt, Princeton Class of ‘76, joined Markus' Academy for a Q&A on digital innovation, privacy, and cybersecurity. Eric Schmidt is the former chairman and CEO of Google and co-founder of Schmidt Futures.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Technology and society: 0:59Privacy - “free to think”: 9:51Free to speak, fake news: 13:26Algorithms and AI: 25:57Cyber Security: 31:10Innovation: 35:16Money/ payment system: 47:44Regulation/Taxation: 52:12Concluding remarks: 57:54

Follow the link for the full summary:

https://markusacademy.substack.com/p/covid-19-a-view-from-outside-the

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 24, 2020, Raghuram Rajan joined Markus' Academy. Rajan is Professor of Finance at Chicago Booth, a former Governor of the Reserve Bank of India, and a former Chief Economist of the IMF.

Download the slides here.

Timelines:

Markus Brunnermeier introduction: 0:00Beginning of Rajan presentation: 8:35The economic playbook: 9:23Containment: 12:31Differences between India and Italy: 16:22Why didn't lockdowns work in India: 22:53Problems are exacerbated by mismanagement: 26:34Why shorter lockdown?: 29:07Consequences: 35:53Has the virus spread EM’s economic damage: 38:07What about relief?: 40:56Central banks have stepped up: 42:49With central bank support: 47:54Why so little relief, is it a mistake?: 49:42An alternative approach: 52:27Modest relief: 54:23Repair: 56:24Tepid recovery without further action: 59:07What next for EM’s: 1:01:52Why is India not doing better: 1:05:15What is next for India:1:09:27Q&A: 1:11:18

Follow the link for the full summary:

https://markusacademy.substack.com/p/climate-policy-moving-beyond-ostriches

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On Friday, July 17, 2020, Richard Zeckhauser joined Markus' Academy for Finance to discuss recent research on prudent climate policy. Zeckhauser is a Professor of Political Economy at the Harvard Kennedy School.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Beginning of Zeckhauser presentation: 16:10Prudent climate policy: 22:28Three prongs for climate policy: 23:30Next ten years are last the chance policy: 24:34Basic argument: 26:38Prospects for reversing these trends: 28:02Likely dates of reaching 2° celsius warming: 30:00Likelihood of climate catastrophe is extremely high: 31:15Resources required by policy prong: 32:34Outline of analysis: 33:33Moral hazard concerns: 35:57Approaches to substitute instruments: 39:15Awful Action Alert: 41:38Deleterious Deterrence: 43:42Types of climate policy observers: 49:32Infeasibility and political economy of targets: 51:09Concluding remarks: 54:32Q&A: 55:36

Follow the link for the full summary:

https://markusacademy.substack.com/p/brazils-perfect-storm

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 13, 2020, Arminio Fraga joined Markus' Academy for a discussion of Brazil’s economy leading up to COVID-19. Fraga is a member of the Group of Thirty and the former president of the Central Bank of Brazil.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Beginning of Fraga presentation: 13:50Divergence since 1980: 16:05What went wrong: 18:05Progress since the 90’s: 19:4190’s progress did not last: 22:06Government spending, tax breaks, and debt: 23:35Bolsa Empresário: 24:54Investment and GDP growth: 26:16Brazil just before Covid-19: 28:03Inequality: 28:38Education: 31:06Ease of doing business: 35:53Governance: 37:56 Global competitive index and social mobility: 38:26Government spending: 39:40Perfect storm: 45:57Major risks: 48:20Hope and resistance: 1:00:06Q&A 1:03:02

Follow the link for the full summary:

https://markusacademy.substack.com/p/narrative-economics-and-covid-19

Link to sign up for the webinar series:

https://markusacademy.substack.com/

On July 10, 2020, Robert J. Shiller joined Markus' Academy for a discussion of narrative economics in light of the COVID-19 epidemic. Shiller is a Professor of Economics at Yale University and a 2013 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

Markus Brunnermeier introduction: 0:00Beginning of Shiller presentation: 13:42JSTOR counts of word “narrative” as percent of all articles, by discipline: 17:17Volatility of financial market: 18:22Long time-series on home prices: 19:39Learning from medical epidemiology: 21:19Kermack- McKendrick SIR disease epidemic model: 23:33Flattening the curve: 27:20Epidemics in waves: 27:52Mutations (in virus, narratives) can cause waves of epidemic: 29:06Examples of narrative epidemics: 30:34Percent of articles that mention the “Great Depression” each year: 36:00Technological unemployment: 37:26The future of narrative economics: 39:33Q&A: 41:08

Highlights:

Our social world is driven by narratives. Narratives can spread like epidemics. “Most people do not respond to analytic discussion,” Shiller said. “They like stories.” There are lessons for narratives in the “epidemic curve,” which rises and falls like a bell-shaped curve. Importantly, the contagion rate of stories may increase as the effectiveness of the storytelling improves (more details, etc.).

Narratives about economics drive both big events and individual behavior during those events. As stories spread, ideas can go viral and move markets. We saw this during the Great Depression and other financial crises. After the 2008-2009 crisis, the market crashed but came back strong. One reason for the rally was that a strong narrative about “not losing out on the rise” led many investors to stay in the market when they otherwise might have left.

It’s difficult to predict how narratives will spread, but studying them can help us prepare for and respond to economic crises. Despite availability of digitized text, it’s still difficult to track popularity of narratives. Shiller says we should start collecting information on economic narratives now.

Follow the link for the full summary: https://markusacademy.substack.com/p/tracking-the-global-pandemic-recovery 

Explore the webinar series: https://markusacademy.substack.com/archive 

On July 6, 2020, Michael Spence joined Markus' Academy for a webinar to discuss new data from a Luohan Academy study that tracks the economic recovery from COVID-19 across several countries. Spence is a Professor of Economics at NYU's Stern School of Business and a 2001 recipient of the Nobel Prize in Economics.

Download the slides here.

Timestamps:

[17:35] Real-time data tracking across 132 countries

[22:30] Digital tools and privacy concerns in tracking the virus

[37:20] Economic and health trade-offs of policy responses

Highlights:

● China suffered a major contraction, but recovered relatively quickly both economically and health-wise through fast and strict intervention. South Korea, Taiwan and Hong Kong did significantly better than Mainland China.

● Economic contractions in the U.S. and the U.K. were less severe than in New Zealand, but recovery has been slower and falls behind both economically and health-wise.

● In Brazil, the economy hasn't contracted as much economically but the virus isn't under control, and in Africa, dangerous numbers are emerging in Nigeria, South Africa, and Rwanda.

● In interpreting the data, Spence notes that a timely, early response is better than a later one, and that government trust during the crisis varied widely — increasing in Australia, declining in the U.K., and remaining low in the U.S. and Mexico.

Follow the link for the full summary: https://markusacademy.substack.com/p/corporate-debt-overhang-and-covid 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 29, 2020, Arvind Krishnamurthy joined the Princeton Bendheim Center for Finance to discuss a new paper co-authored with Markus Brunnermeier on COVID credit policy. Krishnamurthy is a Professor of Finance at the Stanford Graduate School of Business.

Download the slides here.*

● This crisis is different from the 2008 crisis in many ways, and a main goal of policy should be to avoid economic scarring post-pandemic. Today, supply and demand disruptions have required that the Fed and the U.S. Treasury also prop up the corporate sector, with the goal of preventing scarring that extends beyond the pandemic.

● The COVID recession is straining both large corporations and the SME sector, but efforts to reduce scarring require different policy approaches, since $1 injected into a large corporation has a different effect than $1 injected into an SME.

● For small, owner-run enterprises, the best way to avoid scarring is to provide cheap liquidity, to avoid inefficient bankruptcies and erosion of firm value. Large corporations with low bankruptcy restructuring costs, however, should not be subsidized — directing subsidies to large corporates would enable equity-holders to delay Chapter 11 filing longer than is socially valuable.

● Instead, the Federal Reserve and the U.S. Treasury should create a facility to reduce the direct costs of bankruptcy and to shore up bank balance sheets to reduce indirect costs. The Fed should also act now by switching on the countercyclical buffer and asking banks to raise equity while equity prices are high.

Follow the link for the full summary: https://markusacademy.substack.com/p/the-us-labor-market-during-the-beginning 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 26, 2020, Erik Hurst joined the Princeton Bendheim Center for Finance to discuss a new paper on labor market conditions during COVID-19. Hurst is the Frank P. And Marianne R. Diassi Distinguished Service Professor of Economics at the University of Chicago's Booth School of Business.

Download the slides here.*

● By using ADP data, the authors are able to study employer/employee links across 1/6 of the U.S. workforce, comparable in scale to Bureau of Labor Statistics data.

● The U.S. lost about 20% of employment through mid-April, mirroring BLS data, with more job losses among small businesses. 37% of workers in the bottom fifth of the wage distribution lost their jobs through late April, compared with 9% of workers in the top fifth.

● Employment declines were bigger among women than men, which is different than in typical recessions, and employer or industry characteristics explain very little of this. About two-thirds of employment losses were from "continuing firms" that continued paying some workers, with a lot of heterogeneity in job gains and losses among them.

● The average firm that re-opened is at 40% of its February size, with most returning workers being recalled employees. There's been a lot of talk of rising wages, but the authors find this is entirely due to selection effects — when adjusted for, there is no increase in wages, and employers are actually cutting wages of about 11% of workers.

Follow the link for the full summary: https://markusacademy.substack.com/p/understanding-the-ecbs-pandemic-emergency 

Explore the webinar series: https://markusacademy.substack.com/archive

On June 22, 2020, Philip Lane joined the Princeton Bendheim Center for Finance to discuss the ECB's pandemic emergency purchase program (PEPP). Lane is the Chief Economist of the ECB, a member of the ECB Executive Board, and a former Governor of the Central Bank of Ireland.

Download the slides here.*

● PEPP is different from previous EU QE measures in that its main goal is market stabilization, while the ECB's asset purchasing program (QE) is focused on fighting downside risk to inflation. PEPP is also more flexible in how it can respond.

● There's lots of evidence that PEPP has contributed to market stabilization. According to several measures—including systemic stress, corporate bond spreads, the stock market, and 3-month Euribor rates—the EU has seen significant stabilization. Lane argues sovereign yields are an important indicator for the ECB because they are closely reflected in bank funding and passed onto households.

● Without such aggressive intervention by the ECB and central banks, we would have seen a much bigger amplification of the pandemic shock driven by flight-to-safety capital flows. Still, national and EU fiscal responses are/will be essential.

● New data show that wholesale funding is fickle while retail funding remained stable. Domestic banks provided missing funding to national sovereigns, while institutional investors were the big sellers of bonds in March. By April, the pullback effect dissipated for both less and more vulnerable countries, indicating stabilization.