 The coronavirus: Black swan and endowment shockRevista Galega de Economía, 2021, vol. 30, issue 1, 1-14 Abstract: An external shock caused by an extraordinary and unpredictable effect, a “black swan” like COVID-19, is analyzed. It implies a shift of endowment in financial markets, and its effects on economic inequality, financial deepening and total economic income. Theoretical models are proposed, where the public sector seeks alternatives to a lockdown, allowing self-regulation of the economy, taxing capital or seeking joint policies with other states. In the first model, the economy is self-regulating with the help of the financial sector. Nonetheless, inequality is generated and in other models, the public sector tries to intervene. First, the public sector minimizes inequality by taxing capital, allowing a redistribution of wealth and income, with a tax rate that depends only on the differential impacts of the black swan on the different markets. Finally, a coordination of policies between the different countries affected is proposed to prevent black swans and other negative externalities. This is feasible depending on the tax rate, household benefits and administration costs. Keywords: Wealth inequality; Financial sector; Economic crisis; COVID-19; Black swan (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sdo:regaec:v:30:y:2021:i:1_7 Access Statistics for this article More articles in Revista Galega de Economía from University of Santiago de Compostela. Faculty of Economics and Business. Contact information at EDIRC. |
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