The Zombification of the Economy? Assessing the Effectiveness of French Government Support during Covid-19 Lockdown

Guerini, Mattia; Nesta, Lionel; Ragot, Xavier; Schiavo, Stefano

The Zombification of the Economy? Assessing the Effectiveness of French Government Support during Covid-19 Lockdown

Mattia Guerini, Lionel Nesta, Xavier Ragot and Stefano Schiavo

No 9850, CESifo Working Paper Series from CESifo

Abstract: This paper evaluates the risk of zombification of the French economy during the sanitary crisis, as a result of the unconditional financial support provided to firms by public authorities. We develop a simple theoretical framework based on a partial-equilibrium model to simulate the liquidity and solvency stress faced by a large panel of French firms and assess the impact of government support measures. Simulation results suggest that those policies helped healthy but illiquid firms to withstand the shock caused by the pandemic. Moreover, the analysis finds no evidence of a “zombification effect”, as government support has not disproportionately benefited less productive companies.

Keywords: Covid-19; zombie firms; job-retention; schemes; microsimulation; policy evaluation (search for similar items in EconPapers)
JEL-codes: G33 H12 H32 J38 L20 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cfn, nep-eec, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9850

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