Journal of Risk and Financial Management

Editorial

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7 pages, 222 KiB

Open AccessEditorial

Editorial: A Systemic Recovery

by Matheus R. Grasselli, Alan Kirman and William Hynes

J. Risk Financial Manag. 2022, 15(12), 578; https://doi.org/10.3390/jrfm15120578 - 3 Dec 2022

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Abstract

This Special Issue is about how we learn and apply the lessons of the COVID-19 pandemic [...] Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

Research

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26 pages, 2753 KiB

Open AccessArticle

The Interplay between COVID-19 and the Economy in Canada

by Vinicius Albani, Matheus Grasselli, Weijie Pang and Jorge P. Zubelli

J. Risk Financial Manag. 2022, 15(10), 476; https://doi.org/10.3390/jrfm15100476 - 18 Oct 2022

Cited by 2 | Viewed by 2276

Abstract

We propose a generalized susceptible-exposed-infected-removed (SEIR) model to track COVID-19 in Canadian provinces, taking into account the impact of the pandemics on unemployment. The model is based on a network representing provinces, where the contact between individuals from different locations is defined by [...] Read more.

We propose a generalized susceptible-exposed-infected-removed (SEIR) model to track COVID-19 in Canadian provinces, taking into account the impact of the pandemics on unemployment. The model is based on a network representing provinces, where the contact between individuals from different locations is defined by a data-driven mixing matrix. Moreover, we use time-dependent parameters to account for the dynamical evolution of the disease incidence, as well as changes in the rates of hospitalization, intensive care unit (ICU) admission, and death. Unemployment is accounted for as a reduction in the social interaction, which translates into smaller transmission parameters. Conversely, the model assumes that higher proportions of infected individuals reduce overall economic activity and therefore increase unemployment. We tested the model using publicly available sources and found that it is able to reproduce the reported data with remarkable in-sample accuracy. We also tested the model’s ability to make short-term out-of-sample forecasts and found it very satisfactory, except in periods of rapid changes in behavior. Finally, we present long-term predictions for both epidemiological and economic variables under several future vaccination scenarios. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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28 pages, 513 KiB

Open AccessArticle

COVID-19 Mortality and Economic Losses: The Role of Policies and Structural Conditions

by Weichen Wang, Andrea Gurgone, Humberto Martínez, Maria Cristina Barbieri Góes, Ettore Gallo, Ádam Kerényi, Enrico Maria Turco, Carla Coburger and Pêdra D. S. Andrade

J. Risk Financial Manag. 2022, 15(8), 354; https://doi.org/10.3390/jrfm15080354 - 8 Aug 2022

Cited by 5 | Viewed by 2508

Abstract

The response of governments to the COVID-19 outbreak was foremost oriented to two objectives: saving lives and limiting economic losses. However, the effectiveness and success factors of interventions were unknown ex-ante. This study aims to shed light on the drivers of countries’ performances [...] Read more.

The response of governments to the COVID-19 outbreak was foremost oriented to two objectives: saving lives and limiting economic losses. However, the effectiveness and success factors of interventions were unknown ex-ante. This study aims to shed light on the drivers of countries’ performances during the first year of the COVID-19 pandemic. We measure performances by excess mortality and GDP growth adjusted for additional fiscal stimulus. We conduct an empirical analysis in two stages: first, using hierarchical clustering, we partition countries based on their similarity in health and economic outcomes. Second, we identify the key drivers of outcomes in each country cluster by regression analysis, which include linear, least absolute shrinkage and selection operator (LASSO), and logit models. We argue that differences in countries’ performances can be traced back both to policy responses to COVID-19 and structural conditions, the latter being immutable over the pandemic. Three relevant structural conditions emerge from the results: trade reliance on services, corruption, and the size of the vulnerable population (elderly, low-income, smoking, or cardiovascular-failing). Policies such as large-scale open public testing and additional fiscal stimulus in non-health could help reduce excess mortality, which might lead to lower economic losses. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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25 pages, 1952 KiB

Open AccessArticle

Economic Stimulus and Financial Instability: Recent Case of the U.S. Household

by Youngna Choi

J. Risk Financial Manag. 2022, 15(6), 266; https://doi.org/10.3390/jrfm15060266 - 11 Jun 2022

Viewed by 2296

Abstract

The effectiveness of government policies and economic stimuli during the 2007 financial crisis and the COVID-19 pandemic are compared in this study. While the 2007 financial crisis started in the real estate market and spread through the contagion effect to other sectors, the [...] Read more.

The effectiveness of government policies and economic stimuli during the 2007 financial crisis and the COVID-19 pandemic are compared in this study. While the 2007 financial crisis started in the real estate market and spread through the contagion effect to other sectors, the pandemic halted the all sectors of the global economy simultaneously. In the United States, where the social safety net is not as strong as other advanced economies, the unemployment rate skyrocketed and many families lost income. The federal government countered with various relief packages, which have been, unlike the rounds of quantitative easing prevalent after the 2007 financial crisis, direct payments to households and businesses. The Agent Instability Indicator and default elasticity coefficient are used to quantitatively assess the financial instability and default risk of subgroups of United States households classified by percentile of income and net worth. It turns out that the financial instability level of the United States household during the pandemic has not been as high as that during the 2007 crisis and the Great Recession. It is concluded that the direct handout of cash—so called helicopter money—is more effective at preventing financial collapse and stabilizing the economy than quantitative easing through asset purchase. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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18 pages, 1202 KiB

Open AccessArticle

Budgetary Allocations and Government Response to COVID-19 Pandemic in South Africa and Nigeria

by Agunyai Samuel Chukwudi and Ojakorotu Victor

J. Risk Financial Manag. 2022, 15(6), 252; https://doi.org/10.3390/jrfm15060252 - 2 Jun 2022

Cited by 8 | Viewed by 2838

Abstract

The eruption of the novel virus brought to the global scene the prediction that Africa would be worse hit by the pandemic. This prediction was partly built on the widely recognized fact that Africa is the continent with the weakest public health care [...] Read more.

The eruption of the novel virus brought to the global scene the prediction that Africa would be worse hit by the pandemic. This prediction was partly built on the widely recognized fact that Africa is the continent with the weakest public health care system and the lowest budgetary allocations to health. However, contrary to this prediction, the COVID-19 death rate in Africa has been low compared to in other continents. Debates on Africa’s low COVID-19 death rate have generated mixed reactions, the majority of which have centred on beliefs and superstition about hot weather and Africa’s youth-dominated society. Little or none of these reactions have attributed the low COVID-19 death rate to swift and prudent budgetary adjustment, which partly aided a swift response from some African governments. Indeed, not many studies have examined the swiftness in the response of some African governments and prudent budgetary adjustment in tackling the spread of COVID-19. This paper, through secondary data, advances knowledge on how budget revision aided government response to the COVID-19 pandemic in South Africa and Nigeria. It found that both countries adjusted their budgetary allocations in response to COVID-19. It further indicates that South Africa, through budgetary revision, allocated more funds to government agencies in charge of COVID-19 and various relief packages than Nigeria. Moreover, it indicates that the swift budgetary adjustment by both countries partly aided a quick government response that progressively flattened the curve and, in the long run, partly contributed to fiscal impulse and deferrals. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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38 pages, 3056 KiB

Open AccessArticle

Mitigation Strategies for COVID-19: Lessons from the K-SEIR Model Calibrated to the Observable Data

by Alexander Lipton and Marcos Lopez de Prado

J. Risk Financial Manag. 2022, 15(6), 248; https://doi.org/10.3390/jrfm15060248 - 1 Jun 2022

Cited by 3 | Viewed by 2143

Abstract

This article develops a detailed epidemiological multi-factor model, the K-susceptible–exposed–infected–removed (K-SEIR) model, and several simpler sub-models as its building blocks. The general model enables us to account for all the relevant COVID-19 features, its disparate impact on different population groups, and interactions within [...] Read more.

This article develops a detailed epidemiological multi-factor model, the K-susceptible–exposed–infected–removed (K-SEIR) model, and several simpler sub-models as its building blocks. The general model enables us to account for all the relevant COVID-19 features, its disparate impact on different population groups, and interactions within and between the groups. It also includes the availability (or lack thereof) of spare hospital beds and intensive care units (ICU) to accommodate the pent-up demand due to the pandemic. We use the most recent hospitalization and mortality data to calibrate the model. Since our model is multi-factor, we can use it to simulate and analyze the consequences of the sheltering-in-place for each specific group and compare the lives saved and lost due to this measure. We show that in countries with well-developed healthcare systems and a population willing to abide by suitable containment and mitigation procedures, the sheltering in place of the entire community is excessive and harmful when considered holistically. At the same time, sealing nursing homes as thoroughly as possible to avoid high infection and mortality rates is an absolute necessity. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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10 pages, 425 KiB

Open AccessArticle

Business Closures and (Re)Openings in Real-Time Using Google Places: Proof of Concept

by Daniel E. Rigobon, Thibaut Duprey, Artur Kotlicki, Philip Schnattinger , Soheil Baharian and Thomas R. Hurd

J. Risk Financial Manag. 2022, 15(4), 183; https://doi.org/10.3390/jrfm15040183 - 15 Apr 2022

Cited by 3 | Viewed by 3333

Abstract

We present a new estimation of business opening and closure rates using data from Google Places—the data set behind the Google Maps service. Our algorithm, through a bisection routine, counts the appearance and disappearance of “pins” that represent unique businesses. As a proof [...] Read more.

We present a new estimation of business opening and closure rates using data from Google Places—the data set behind the Google Maps service. Our algorithm, through a bisection routine, counts the appearance and disappearance of “pins” that represent unique businesses. As a proof of concept, we compute business opening and closure rates for the city of Ottawa during the reopening phase of the COVID-19 pandemic in mid-2021. The lifting of restrictions coincides with a wave of re-entry of temporarily closed businesses, suggesting that government support may have facilitated the survival of hibernating businesses. Our entry estimates are validated by a survey of new businesses. This methodology allows policymakers to monitor business dynamics in quasi-real-time during rapidly unfolding crises. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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9 pages, 259 KiB

Open AccessArticle

The Drivers of Policies to Limit the Spread of COVID-19 in Europe

by Sebastien Bourdin, Slimane Ben Miled and Jamil Salhi

J. Risk Financial Manag. 2022, 15(2), 67; https://doi.org/10.3390/jrfm15020067 - 1 Feb 2022

Cited by 18 | Viewed by 2681

Abstract

While many articles have analyzed the effectiveness of the policies that aimed to limit the spread of COVID-19, very little research work has examined the determinants that drove these policies. Therefore, we proposed to study the determinants that led government authorities to implement [...] Read more.

While many articles have analyzed the effectiveness of the policies that aimed to limit the spread of COVID-19, very little research work has examined the determinants that drove these policies. Therefore, we proposed to study the determinants that led government authorities to implement more or less restrictive policies to limit the spread of the pandemic. Using the COVID-19 stringency index, we highlighted a positive effect of the incidence rate on the stringency level. Patient capacity in intensive care units was also a key variable. This is indicative of the capacity of countries to have a sufficient and appropriate health system to absorb such pandemic crises. On the other hand, we show that epidemiological data regarding the risk of excess mortality (diabetes, cancer, and cardiovascular pathologies) had a negative effect. We conclude by recalling the importance of policy coordination between countries when it comes to lowering the stringency levels of measures, in order to avoid a resurgence of the epidemic. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

Review

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18 pages, 340 KiB

Open AccessReview

Enacting Economic Resilience: A Synthesis of Economic and Communication Frameworks

by Timothy Betts and Patrice M. Buzzanell

J. Risk Financial Manag. 2022, 15(4), 178; https://doi.org/10.3390/jrfm15040178 - 13 Apr 2022

Cited by 5 | Viewed by 2715

Abstract

This work examines three frameworks for responding to economic disruption: risk mitigation, systemic recovery, and economic resilience. Specifically, by reviewing the metatheoretical commitments, analytic contexts, and implications of two economic perspectives, represented by risk mitigation and systemic recovery, we argue that current approaches [...] Read more.

This work examines three frameworks for responding to economic disruption: risk mitigation, systemic recovery, and economic resilience. Specifically, by reviewing the metatheoretical commitments, analytic contexts, and implications of two economic perspectives, represented by risk mitigation and systemic recovery, we argue that current approaches to understanding resilience in academic economics have failed to address ongoing and emergent disruptions in the economic and social world. In response, this work also reviews a possible synthesis of economic and communication frameworks. This review places the economic resilience framework, inspired by the communication theory of resilience, in conversation with extant literature in economics, communication studies, and other disciplines and concludes with an outline for further theoretical, methodological, and practical development. Full article

(This article belongs to the Special Issue Systemic Recovery: Lessons from COVID-19, Modeling, Analysis, and Policy Implications)

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