Research

The macroeconomic dynamics at higher frequencies are analyzed in answering whether the dynamic in times of Covid has been different with respect to the past crises. To tackle this problem, we fit a dynamic factor model using macroeconomic data in conjunction with epidemiological data from the times of the pandemic. We find that the pandemic time dynamics were significantly different in comparison to other crises. An additional dynamic factor is required to better fit the uncommon dynamics. The application of the dynamic model with a Covid-specific factor allows to strip the data of the erratic behavior of the pandemic times by orthogonalizing with respect to the Covid dynamic factor and allow the researchers to use the adjusted data for macroeconomic analysis.

This work tackles the question of identifying and estimating US regional multipliers of federal spending using a rich data set of the government contract awards. Using the data description, a distinction is made between the contract signing time and the timing of the contract payment to ensure correct spending attribution. Variation across states, times, firms, and industries is employed to obtain the instruments for the federal government spending on the state level and estimate the fiscal multipliers. Several versions of shift-share instruments are constructed, including classical Bartik, fixed share approach, and the instrument based on heterogeneous spending.