EconPapers    
Economics at your fingertips  
 

Bankruptcies, unemployment and reallocation from Covid-19

Ryan Banerjee, Kharroubi Kharroubi and Ulf Lewrick

No 31, BIS Bulletins from Bank for International Settlements

Abstract: The expected wave of business failures in the Covid-19 recession has yet to materialise, due in part to policy support, but also reflecting the inherent lag between declines in GDP and insolvencies. Bankruptcies weigh heavily on labour markets. Unemployment typically increases three times more if a fall in GDP is accompanied by a similar-sized increase in bankruptcies. Concentration of bankruptcies in those sectors hit especially hard by Covid-19 could exert a significant drag on the labour market. The natural renewal process where young, dynamic firms displace those who exited takes two to three years, leaving a protracted period of lacklustre activity. This underscores the need to reallocate resources quickly and efficiently to drive growth in the post-pandemic world.

Pages: 9 pages
Date: 2020-10-13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.bis.org/publ/bisbull31.pdf Full PDF document (application/pdf)
https://www.bis.org/publ/bisbull31.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:bisblt:31

Access Statistics for this paper

More papers in BIS Bulletins from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Christian Beslmeisl ().

 
Page updated 2021-06-10
Handle: RePEc:bis:bisblt:31