We discuss the impact of a Covid-like shock on a simple toy economy, described by the  Mark-0 Agent-Based Model that we developed and discussed in a series of previous papers . We consider a mixed supply and demand shock, and show that depending on the shock parameters (amplitude and duration), our toy economy can display V-shaped, U-shaped or W-shaped recoveries, and even an L-shaped output curve with permanent output loss. This is due to the existence of a self-sustained "bad" state of the economy . We then discuss two policies that attempt to moderate the impact of the shock: giving easy credit to firms, and the so-called helicopter money, i.e. injecting new money into the households savings. We find that both policies are effective if strong enough , and we highlight the potential danger of terminating these policies too early . While we only discuss a limited number of scenarios, our model is flexible and versatile enough to allow for a much wider exploration , thus serving as a useful tool for the qualitative understanding of post-Covid recovery. We provide an on-line version of the code at URL .
We discuss the impact of a Covid-19--like shock on a simple model economy, described by the previously developed Mark-0 Agent-Based Model . We consider a mixed supply and demand shock, and show that depending on the shock parameters (amplitude and duration), our model economy can display V-shaped, U-shaped or W-shaped recoveries, and even an L-shaped output curve with permanent output loss. This is due to the economy getting trapped in a self-sustained "bad" state . We then discuss two policies that attempt to moderate the impact of the shock: giving easy credit to firms, and the so-called helicopter money, i.e. injecting new money into the households savings. We find that both policies are effective if strong enough . We highlight the potential danger of terminating these policies too early , although inflation is substantially increased by lax access to credit. Finally, we consider the impact of a second lockdown. While we only discuss a limited number of scenarios, our model is flexible and versatile enough to accommodate a wide variety of situations , thus serving as a useful exploratory tool for a qualitative, scenario-based understanding of post-Covid recovery. The corresponding code is available on-line .
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Covid-like
Covid-19--like
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toy
model
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previously developed
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that we developed and discussed in a series of previous papers
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toy
model
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existence of
economy getting trapped in
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of the economy
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, and we
. We
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, although inflation is substantially increased by lax access to credit. Finally, we consider the impact of a second lockdown.
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allow for a much wider exploration
accommodate a wide variety of situations
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tool for the qualitative
exploratory tool for a qualitative, scenario-based
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We provide an
The corresponding code is available
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version of the code at URL