Fall 2020
Article
Brookings Papers on Economic Activity

Business Credit Programs in the Pandemic Era

By: Samuel G. Hanson, Jeremy C. Stein, Adi Sunderam and Eric Zwick

Format:Print

Abstract

We develop a pair of models that speak to the goals and design of the sort of business-lending and corporate-bond purchase programs that have been introduced by governments in response to the ongoing COVID-19 pandemic. An overarching theme is that, in contrast to the classic lender-of-last-resort thinking that underpinned much of the response to the 2007–2009 global financial crisis, an effective policy response to the pandemic will require the government to accept the prospect of significant losses on credit extended to private sector firms.

Keywords

COVID-19; Business Lending; Government Intervention; Econometric Models; Health Pandemics; Credit; Governance; Policy

Citation

Hanson, Samuel G., Jeremy C. Stein, Adi Sunderam, and Eric Zwick. "Business Credit Programs in the Pandemic Era." Brookings Papers on Economic Activity (Fall 2020).