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Migration has been demonstrated by various studies to be closely linked to improvements in individual- and household-level outcomes. Rather than examining the effects of migration, this paper explores whether an economic shock in United States negatively affected migrant households in rural Guatemala. Treating the Great Recession as a natural experiment affecting migrant and non-migrant households differently, the paper puts the spotlight on the effect on child anthropometry, including longer-term indicators of height-for-age z-scores. Panel data on children and multiple children in households enable double- and triple-difference estimation. In relative terms, migrant households fared far worse than non-migrant households over the period. In particular, large advantages in child anthropometric status for the youngest children in migrant households in 2008, just prior to the crisis, were substantially diminished four years later. The findings underscore the possible fragility of the benefits of migration, particularly in the face of a substantial economic shock, and point to the potential importance of deepening social safety nets.

2008 Great Recession --- Child Growth --- Early Child and Children's Health --- Economic Shock --- Health, Nutrition and Population --- Migration --- Poverty Reduction --- Remittances --- Stunting

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The expansionary fiscal contraction (EFC) hypothesis states that fiscal austerity can increase output or consumption when a country is under heavy debt burdens because it sends positive signal about the country's solvency situation and long-term economic wellbeing. Empirical tests of this hypothesis have suffered from identification concerns due to data sources and empirical methodology. Using a sample of OECD countries between 1978 and 2014, this paper combines new IMF narrative data and the proxy structural Vector Auto-regression (SVAR) method to examine whether fiscal austerities can be expansionary when debt levels are high. Fiscal austerities are measured as 1) narrative fiscal shocks and 2) structural shocks from a proxy SVAR. Additionally, this paper uses a model-based approach to determine the cutoff debt level beyond which EFC is expected to be observed. This paper finds empirical evidence in support of the EFC hypothesis for OECD countries: results for output are driven by changes in tax rates and are robust to how one defines a high-debt regime and how one measures austerity.

Austerity --- Debt Burden --- Debt Sustainability --- Economic Crisis --- Economic Shock --- External Debt --- Fiscal Adjustment --- Fiscal Consolidation --- Fiscal Policy --- Fiscal Shock --- International Economics and Trade --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Structural Vector Autoregression

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This paper explores the effect of oil shocks on electoral outcomes. Using a new polling and election data set for 207 elections across 50 democracies, the paper shows that oil price increases systematically lower the odds of reelection for incumbents. The analysis verifies that these shocks - which reduce consumption growth - are associated with worsening performance for incumbents in the runup to reelection and a reversal in the leaning of the political party in power post-election.

Consumption --- Democracy --- Democratic Government --- Economic Shock --- Economic Theory and Research --- Elections --- Energy --- Energy Consumption --- Governance --- Inflation --- Macroeconomics and Economic Growth --- Oil and Gas --- Oil Prices --- Oil Shock --- Political Economy

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What are the effects of a large temporary shock to the economy such as a temporary lockdown in response to a pandemic? Are the effects propagated and made persistent by firms' deteriorating balance sheets and labor market frictions? This paper develops a model with financial market and labor market frictions to answer these questions. The model makes quantitative predictions about the effect on output, employment and firm dynamics from lockdowns of varying magnitude and duration. It finds that the effects are not persistent despite the deterioration of the financial soundness of non-essential firms and labor market frictions, if (i) laid-off workers can be recalled by their previous employers without having to go through the frictional labor market and (ii) the government provides employment subsidies to firms during lockdown. However, the effect are heterogeneous and young non-essential firms are disproportionately affected. In addition, if lockdowns lead to more permanent reallocation across industries, the recession becomes more protracted.

Business Cycles and Stabilization Policies --- Coronavirus --- COVID-19 --- Economic Shock --- Employment --- Employment Subsidy --- Firm Dynamics --- Labor Markets --- Lockdown --- Macroeconomics and Economic Growth --- Private Sector Development --- Private Sector Economics --- Resource Reallocation --- Social Protections and Labor

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This paper conducts a simple stress test to gauge the ability of listed nonfinancial corporates to withstand shocks to earnings and receivables. It targets two basic accounting ratios that capture a firm's ability to cover its short-term liabilities and interest expenses. The full sample consists of almost 17,000 firms in 73 emerging markets and developing economies and represents USD 22.1 trillion in total assets and USD 6.05 trillion in total debt. The findings show that, prior to the pandemic, almost 60 percent of the debt was associated with firms that already exhibited vulnerabilities according to at least one ratio. A 30-percent shock to earnings and receivables raises this to 88 percent, of which 29 percentage points is vulnerable in terms of both indicators, a 230-percent increase compared with before to the pandemic. Firms in East Asia and Pacific, the Middle East and North Africa, and South Asia appear to be the most exposed. Some countries with vulnerable corporate sectors also display weaknesses in insolvency frameworks, which may impede restructurings and write-downs and contribute to a surge in socially inefficient liquidations of cash-strapped but otherwise viable firms.

Business Cycles and Stabilization Policies --- Coronavirus --- Corporate Data and Reporting --- Corporate Performance --- Corporate Vulnerability --- COVID-19 --- Debt --- Debt Distress --- Economic Conditions and Volatility --- Economic Shock --- Emerging Market Economies --- Emerging Markets --- Finance and Financial Sector Development --- Financial Crisis Management and Restructuring --- Macroeconomics and Economic Growth --- Pandemic Impact --- Private Sector Development --- Private Sector Economics