The Harvard Crimson has published an interesting piece that debates the merits of another Zoom semester in fall 2020.  The author endorses delaying this semester until Spring 2021. 

Suppose that Harvard follows this plan.  Current rising Seniors (who should have graduated in May 2021) will demand dorm rooms on campus in Fall 2021 as new Freshman show up.  Given the finite supply of dorm rooms, this "excess demand" means that real estate prices in a vicinity of campuses will rise to clear the market. Owners of these properties will gain a windfall as undergraduates look for housing nearby.    Graduate students will experience a reduction in their living standards because their stipends are unlikely to rise.

The world needs a COVID-19 Vaccine.   Is there now a patent race to deliver a high quality vaccine?  Will the "winner takes all" winner gain a multi-trillion dollar patent?  There are over 7 billion people on the planet. If the average value of life around the world is $2 million dollars and if the vaccine reduces the probability of death by 1 percentage point, then each risk neutral person would be willing to pay $20,000 for this vaccine.

As each nation engages in a large Keynesian government expenditure expansion to reduce the short run economic impacts of COVID-19, this will create a huge budget deficit for every nation.   If every nation faces a budget deficit, then cross-country capital flows (i.e China buying U.S bonds) is unlikely to be a key mechanism for a given country to achieve a dynamic balanced budget.  This logic suggests that future taxes will rise.

In this blog post, I will argue that larger firms have an edge in adapting to workplace COVID-19 risk.  For impatient readers, take a look at this article about Amazon's recent efforts to screen workers.   Larger firms feature the economies of scale to pay the fixed costs for cutting edge technology for screening workers.

Some time this summer, I will revise my  Price Theory Problems e-book.   Here is a new problem I will add.

My goal in posting this is to highlight how different firms are affected by the same economic shock and to show how the use of past econometric models that no longer hold create profit opportunities. I do not actively own any stock in any insurance companies and I do not consult for them.

Every driver is required to buy car insurance.

Many urban scholars have noted that richer people tend to suburbanize.  Bob Margo's 1992 paper makes this point in a straightforward way.    The usual explanations focus on the demand for newer, larger homes and fears of center city taxes and center city quality of life challenges (crime and pollution). 

In recent years as crime has fallen in many center cities and with the rise in the sharing App economy, consumer center city living has boomed.

A growing group of urban scholars are now considering the long run effects of COVID-19 on optimal urban density patterns.

Do Social Networks Increase or Decrease the COVID-19 Contagion Rate?

Dora L. Costa

Kenneth T. Sokoloff Professor of Economic History

UCLA

Costa@econ.ucla.edu. 

Matthew E. Kahn

Bloomberg Distinguished Professor of Economics and Business

Director of the 21st Century Cities Initiative

mkahn10@jhu.edu

Each nation will face less contagion risk if we as individuals engage in social distancing.   But some people are choosing to continue to live their lives under business as usual.
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