COVID-19 and SMEs: A 2021 "Time Bomb"?

Pierre-Olivier Gourinchas, Sebnem Kalemli-Ozcan, Veronika Penciakova and Nick Sander (ncksander@berkely.edu)
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Veronika Penciakova: https://www.atlantafed.org/research/economists/penciakova-veronika.aspx

No 2021-6, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: This paper assesses the prospects of a 2021 time bomb in small and medium-sized enterprises (SME) failures triggered by the generous support policies enacted during the 2020 COVID-19 crisis. Policies implemented in 2020, on their own, do not create a 2021 time bomb for SMEs. Rather, business failures and policy costs remain modest. By contrast, credit contraction poses significant risk. Such a contraction would disproportionately affect firms that could have survived COVID-19 in 2020 without any fiscal support. Even in that scenario, most business failures would not arise from excessively generous 2020 policies but rather from the contraction of credit to the corporate sector.

Keywords: business formation; entrepreneurship; business dynamism; recessions (search for similar items in EconPapers)
JEL-codes: E32 L26 M21 (search for similar items in EconPapers)
Pages: 8
Date: 2021-01-29
New Economics Papers: this item is included in nep-ent, nep-mac and nep-sbm
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Citations: View citations in EconPapers (2)

Published in 2021

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Working Paper: COVID-19 and SMEs: A 2021 "Time Bomb"? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedawp:90076

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DOI: 10.29338/wp2021-06

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