The Zombification of the Economy? Assessing the Effectiveness of French Government Support during Covid-19 Lockdown - Les publications de l'OFCE (Observatoire français des conjonctures économiques) Access content directly
Journal Articles Journal of Economic Behavior and Organization Year : 2024

The Zombification of the Economy? Assessing the Effectiveness of French Government Support during Covid-19 Lockdown

Abstract

This paper evaluates the risk of zombification of the French economy during the COVID-19 pandemic crisis, as a result of the unconditional financial support provided to firms by public authorities, to limit the impact of lockdown measures. We develop a simple theoretical framework based on a partial-equilibrium model to simulate the liquidity and solvency stress faced by a large panel of French firms and assess the impact of government support. Simulation results suggest that those policies helped healthy but illiquid firms to withstand the shock caused by the pandemic. Moreover, the analysis finds no evidence of a “zombification effect”, as less productive companies did not disproportionately benefit from government support.
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Dates and versions

hal-04384037 , version 1 (16-01-2024)

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Mattia Guerini, Lionel Nesta, Xavier Ragot, Stefano Schiavo. The Zombification of the Economy? Assessing the Effectiveness of French Government Support during Covid-19 Lockdown. Journal of Economic Behavior and Organization, 2024, 218, pp.263-280. ⟨10.1016/j.jebo.2023.12.013⟩. ⟨hal-04384037⟩
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