Emil Verner

Bio: Emil Verner is an academic researcher from Massachusetts Institute of Technology. The author has contributed to research in topics: Household debt & Business cycle. The author has an hindex of 10, co-authored 20 publications receiving 928 citations. Previous affiliations of Emil Verner include Princeton University.

Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu

Abstract: Do non-pharmaceutical interventions (NPIs) aimed at reducing mortality during a pandemic necessarily have adverse economic effects? We use variation in the timing and intensity of NPIs across U.S. cities during the 1918 Flu Pandemic to examine their economic impact. While the pandemic itself was associated with economic disruptions in the short run, we find these disruptions were similar across cities with strict and lenient NPIs. In the medium run, we find suggestive evidence that, if anything, NPIs are associated with better economic outcomes. Our findings indicate that NPIs can reduce disease transmission without necessarily further depressing economic activity.

Household Debt and Business Cycles Worldwide

Abstract: An increase in the household debt to GDP ratio predicts lower subsequent GDP growth and higher unemployment in an unbalanced panel of 30 countries from 1960 to 2012. Low mortgage spreads are associated with an increase in the household debt to GDP ratio and a decline in subsequent GDP growth, highlighting the importance of credit supply shocks. Economic forecasters systematically over-predict GDP growth at the end of household debt booms, suggesting an important role of flawed expectations formation. The negative relation between the change in household debt to GDP and subsequent output growth is stronger for countries with less flexible exchange rate regimes and those closer to the zero lower bound on nominal interest rates. We also uncover a global household debt cycle that partly predicts the severity of the global growth slowdown after 2007. Countries with a household debt cycle more correlated with the global household debt cycle experience a sharper decline in growth after an increase in domestic household debt.

Household Debt and Business Cycles Worldwide

Abstract: An increase in the household debt to GDP ratio predicts lower GDP growth and higher unemployment in the medium run for an unbalanced panel of 30 countries from 1960 to 2012. Low mortgage spreads are associated with an increase in the household debt to GDP ratio and a decline in subsequent GDP growth, highlighting the importance of credit supply shocks. Economic forecasters systematically over-predict GDP growth at the end of household debt booms, suggesting an important role of flawed expectations formation. The negative relation between the change in household debt to GDP and subsequent output growth is stronger for countries with less flexible exchange rate regimes. We also uncover a global household debt cycle that partly predicts the severity of the global growth slowdown after 2007. Countries with a household debt cycle more correlated with the global household debt cycle experience a sharper decline in growth after an increase in domestic household debt.

Banking Crises Without Panics

Abstract: We examine historical banking crises through the lens of bank equity declines, which cover a broad sample of episodes of banking distress with and without banking panics. To do this, we construct a new data set on bank equity returns and narrative information on banking panics for 46 countries over the period of 1870 to 2016. We find that even in the absence of panics, large bank equity declines are associated with substantial credit contractions and output gaps. Although panics are an important amplification mechanism, our results indicate that panics are not necessary for banking crises to have severe economic consequences. Furthermore, panics tend to be preceded by large bank equity declines, suggesting that panics are the result, rather than the cause, of earlier bank losses. We use bank equity returns to uncover a number of forgotten historical banking crises and create a banking crisis chronology that distinguishes between bank equity losses and panics.

How Does Credit Supply Expansion Affect the Real Economy? The Productive Capacity and Household Demand Channels

Abstract: Credit supply expansion can affect an economy by increasing productive capacity or by boosting household demand. In this study, we develop a test to determine if the household demand channel is present, and we implement the test using both a natural experiment in the United States in the 1980s and an international panel of 56 countries over the last several decades. Consistent with the importance of the household demand channel, we find that credit supply expansion boosts nontradable sector employment and the price of nontradable goods, with limited effects on tradable sector employment. Such credit expansions amplify the business cycle and lead to more severe recessions.

Physical distancing interventions and incidence of coronavirus disease 2019: natural experiment in 149 countries.

Abstract: Objective To evaluate the association between physical distancing interventions and incidence of coronavirus disease 2019 (covid-19) globally. Design Natural experiment using interrupted time series analysis, with results synthesised using meta-analysis. Setting 149 countries or regions, with data on daily reported cases of covid-19 from the European Centre for Disease Prevention and Control and data on the physical distancing policies from the Oxford covid-19 Government Response Tracker. Participants Individual countries or regions that implemented one of the five physical distancing interventions (closures of schools, workplaces, and public transport, restrictions on mass gatherings and public events, and restrictions on movement (lockdowns)) between 1 January and 30 May 2020. Main outcome measure Incidence rate ratios (IRRs) of covid-19 before and after implementation of physical distancing interventions, estimated using data to 30 May 2020 or 30 days post-intervention, whichever occurred first. IRRs were synthesised across countries using random effects meta-analysis. Results On average, implementation of any physical distancing intervention was associated with an overall reduction in covid-19 incidence of 13% (IRR 0.87, 95% confidence interval 0.85 to 0.89; n=149 countries). Closure of public transport was not associated with any additional reduction in covid-19 incidence when the other four physical distancing interventions were in place (pooled IRR with and without public transport closure was 0.85, 0.82 to 0.88; n=72, and 0.87, 0.84 to 0.91; n=32, respectively). Data from 11 countries also suggested similar overall effectiveness (pooled IRR 0.85, 0.81 to 0.89) when school closures, workplace closures, and restrictions on mass gatherings were in place. In terms of sequence of interventions, earlier implementation of lockdown was associated with a larger reduction in covid-19 incidence (pooled IRR 0.86, 0.84 to 0.89; n=105) compared with a delayed implementation of lockdown after other physical distancing interventions were in place (pooled IRR 0.90, 0.87 to 0.94; n=41). Conclusions Physical distancing interventions were associated with reductions in the incidence of covid-19 globally. No evidence was found of an additional effect of public transport closure when the other four physical distancing measures were in place. Earlier implementation of lockdown was associated with a larger reduction in the incidence of covid-19. These findings might support policy decisions as countries prepare to impose or lift physical distancing measures in current or future epidemic waves.

If the world fails to protect the economy, COVID-19 will damage health not just now but also in the future.

Abstract: Previous crises have shown how an economic crash has dire consequences for public health. But in the COVID-19 pandemic, the world is entering uncharted territory. The world’s leaders must prepare to preserve health.