In the Year 2030, How Will Applied Microeconomists Study the Consequences of the 2020 COVID Shock?

An active research field in climate economics uses natural disasters as “natural experiments” to learn about the economic effects of such shocks.  Amine Ouazad and I study how major hurricanes impact bank lending and securitization patterns in this study.   Gary Lin, Rhiannon Jerch and I study local public finance dynamics in the aftermath of disasters in this study.    In both papers, our estimation strategy relies on the fact that we have a “treatment group” and a “control group”.   Intuitively, there are places that are roughly similar that have and have not been recently hit with a shock.  This allows us to use standard statistical methods to try to attribute the impact of the shock on those places that did get hit.  An assumption in such work is that “general equilibrium effects” can be ignored so that the set of places not hit by the shock are not affected by the responses in the places that were hit by shock. Intuitively, if all of the people in the places hit with a hurricane move to the areas not hit by the hurricane, then this is an enormous general equilibrium effect!   The U.S is a very big nation and even major storms do not trigger a mass migration.