DEPARTMENT OF ECONOMICS

The recession that broke out with the onset of the coronavirus pandemic lasted just two months, officially ended in April 2020. That makes it the shortest downturn on record, according to the committee of economists that determines when recessions begin and end. The U.S. economy reached a peak in February 2020, the National Bureau of Economic Research’s Business Cycle Dating Committee said Monday. The recession began the following month and ended in April.

The COVID-19 crisis has been devastating for much of the global economy. Yet while the effects on established markets have been well-documented, less is known about the pandemic's impacts on low- and middle-income countries, which account for the majority of the world's population. This is partly because official statistics generally fail to capture the impact on informal markets, such as street-vendor sales, in which large sections of those economies participate. So Kellogg finance professor Dean Karlan and Northwestern professor of economics Chris Udry, along with more than 20 collaborators, set out to measure the pandemic's economic impact in low- and middle-income countries.

We hope you enjoy reading the Summer 2021 edition of our Newsletter. This edition includes a Q&A with our Director of Undergraduate Studies, Mark Witte, book recommendations, new faculty updates, and more!

There is an ongoing debate over what kinds of investment in human capital — roughly the knowledge, skills, habits, abilities, experience, intelligence, training, judgment, creativity and wisdom possessed by an individual — contribute most to productivity and life satisfaction.

The work of the IPCC has highlighted the role of human activities in climate change and the importance of acting now to limit the rise in temperatures to less than 2°C compared to the pre-industrial era. With this objective in mind, and following the signing of the Paris Agreement in 2015, France has set itself the objective of being carbon neutral by 2050. By committing today to ambitious policies and setting clear and credible milestones, France and Europe can play a leading role in international climate action. The commission, led by Mar Reguant, Associate Professor of Economics at Northwestern University, Illinois, and Christian Gollier, Professor and Director General of the Toulouse School of Economics (TSE), presented an analytical framework and proposals to accelerate the achievement of these goals.

“On some days everything gets totally out of hand,” sighs Katharina Boesche, a German self-employed lawyer and mother of three. Fourteen months of closures and semi-closures of her daughters’ schools have taken a toll. She mostly works late at night or between 4am and 8am—when the house is quiet. The girls have coped with online learning, she says, but the seven-year-old needs a lot of supervision. Their school, like most in Germany, is only welcoming them back part-time. Mrs Boesche is stressed and exhausted.

A new research paper from Northwestern University and the University of Kent claims that, on average, workers become more productive over their working life, as they’re able to learn by doing and accordingly should pay a higher rate of tax as they become older.