Tag: virus

China Economy Expands In 2020 As Board From Virus Gains

While a treatment helps those who are already sick, a vaccine only saves individuals who have not yet contracted the virus. So if policymakers expect that a vaccine is forthcoming, “they have much more of an incentive to prevent people from getting infected, ” in hopes of minimizing the death toll, says Rebelo. In the event that hospitals could not keep up with patient needs, a robust containment policy would be especially imperative, to “flatten the curve” of infections and avoid overwhelming healthcare systems. The model predicts that, in the event that hospitals will reach full capacity, an optimal containment strategy would save millions of lives in the United States. And based on that widely accepted economic cost of a lost life, the benefits of saving so many people outweigh the direct economic costs, severe as those costs may seem.

However , new research suggests that not shuttering these businesses would be much costlier to society, once both the economic and human costs are factored in. Although proceeding with business as usual would avert a severe recession, it would also cause hundreds of thousands more deaths—and, based on accepted estimates of the cost of a lost life, this increased human toll will more than cancel out the expected economic benefits. Yet the economic toll of these measures is expected to be in the trillions, leading some commentators, including President Trump, to argue that the cost of stemming the pandemic could soon exceed the human cost of the pandemic itself.

This outcome occurs because people choose to cut their shopping and working by only the amount that reduces their own personal rate of infection—ignoring that every time they venture out, they may spread the virus to others. First the researchers considered what would have happened if governments hadn’t stepped in and people were allowed to decide for themselves how much to risk exposure by shopping and working. Such a scenario (which assumes there’s no vaccine for the virus) would likely result in a relatively small recession, with aggregate consumption falling slightly in the peak infection months. The researchers conclude that containment measures are not only economically justified—they’re the only way to ensure that people will change their behavior enough to minimize the full cost of the virus.

Those on the right, such as technology and healthcare, are growth stocks. The red bars show what has happened to their average share prices – in other words, how far they have fallen. Interestingly, the stock market impact has been more severe on value stocks, meaning mature companies that attract investors by paying dividends, not because they are seen as having great potential for growth.

Economy Article

Before diving into a discussion of the attention economy, let’s clarify the definition of attention. The formal psychological definition of attention and the way most people think of the concept overlap. Government policies will determine how well companies can come through.

The chart below shows different sectors along the x axis and shows their average PE ratios in the blue bars. The sectors towards the left, like airlines and finance, are value stocks.

Compared to the so-called growth stocks, such companies typically have lower ratios between their stock market prices and earnings. Rather than gradually ramping up containment efforts, then, the optimal policy would be to immediately impose strict limitations on working and shopping, since herd immunity is no longer a concern. “You put the brakes on right away, try to frontload the containment, because you’re trying to buy some time for the vaccine to arrive, ” says Rebelo. If a vaccine is likely to arrive within a yr, however, the story is different.