19 Oct 20 | News

Modeling the macroeconomic, distributional and epidemiological effects of Covid-19

Project MODVid: Developing analytical tools to nowcast and forecast the macroeconomic, distributional and epidemiological effects of the crisis and related public health vs. economic policy responses in Luxembourg

The Luxembourg National Research Fund has retained for funding the transversal research project ‘MODVid’ (modeling the macroeconomic and distributional effects of Covid-19 and restarting scenarios) which is coordinated by LISER and involves 20 researchers from the University of Luxembourg, STATEC and LISER. Building upon the previous RECOVid project, the new research project is comprised of four complementary and interdependent work packages (WP). Together they estimate the macroeconomic, distributional, and epidemiological effects of the crisis and of restarting scenarios in Luxembourg.

The WP leaders philosophy is to develop a set of evolving and interconnected modeling tools that aim to deliver outputs in the short and medium term. WP1 and WP2 will provide estimates of the macroeconomic, distributional, and epidemiological effects of the crisis and of restarting scenarios in Luxembourg. WP3 and WP4 will focus on medium-term effects on firms and households and aim to help decision makers avoid a rise in inequality and large welfare losses in the aftermath of the crisis.

Work Package details

WP1 - Short-run health and macroeconomic effects. – The model developed in WP1 will be used to nowcast the economic consequences of the crisis, and to produce simulation results that can inform public decisions about the relevant modalities and timing/extent of public health policies. Leaders: Frédéric Docquier (LISER-CB) and Tom Haas (STATEC). Potential partners: Chiara Peroni (STATEC), Joël Machado (LISER-LM), Michal Burzynski (LISER-LM), Michel Beine (Unilu-Econ), Pierre Picard (UniluEcon); Françoise Kemp (Unilu-LCSB), Stefano Magni (Unilu-LCSB)

WP2 - Short- and medium-term distributional effects. – The tools developed in WP2 will be used to estimate of the effect of the crisis on the whole distribution of disposable income in the population, along with estimation of the total tax revenues and bene?t spending. Leaders: Philippe Van Kerm (Unilu/LISER) and Denisa Sologon (LISER-LIC). Partners : Nizamul Islam, Vincent Vergnat, Nathalie Lorentz, Kristell Leduc (LISER LIC). In Part II: I. Kyzyma, J. Linden (LISER-LIC); C. O’Donoghue, J. McHale (NUI); Philippe Van Kerm (UL-LISER LIC).

WP3 - Occupational sorting after the crisis. – WP3 investigates the medium-term impact of Covid-19 lockdown and restarting scenarios on workers’ occupational allocation, wage distribution, occupational mobility and value added by sector in Luxembourg and other EU member states. Leader: Michal Burzynski (LISER-LM).

WP4 - YMAA in the post-Covid wealth crisis. – WP4 focuses on a speci?c potentially vulnerable population, young-mid-aged adults (YMAA) – typically in the ?rst two decades of their involvement in the labour market – and the welfare implications of negative shocks on wealth, health, family disruptions, mass unemployment, etc. Leader: Louis Chauvel (Unilu). Partners: Jason Settels (Unilu), Francisco Ceron (Unilu), Herbert Smith and Hyunjoon Park (UPenn).