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  • 2021
  • Chapter
  • Rebuilding the Post-Pandemic Economy

Business Continuity Insurance in the Next Disaster

By: Samuel Gregory Hanson, Adi Sunderam and Eric Zwick
  • Format:Print
  • | Pages:26
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Abstract

This article draws lessons from the business support policies pursued in the COVID-19 pandemic to guide policy design for the next disaster. We contrast the performance of the Paycheck Protection Program to the Main Street Lending Program to illustrate how design principles—targeting, repayment terms, and deployment through the banks versus government agencies—affect policy outcomes. We develop a framework for understanding why a novel business support policy could usefully complement traditional support programs. One surprising insight that emerges from this analysis is that many of the market failures used to justify support during the pandemic also arise in “garden-variety” recessions. Given our framework, the policy case for small-business support during the recovery is considerably weaker than during the disaster, though credit policies that promote firm entry could aid the reallocation process.

Keywords

COVID-19 Pandemic; Policy; Economic Slowdown and Stagnation; Financing and Loans; United States

Citation

Hanson, Samuel Gregory, Adi Sunderam, and Eric Zwick. "Business Continuity Insurance in the Next Disaster." In Rebuilding the Post-Pandemic Economy, edited by Melissa S. Kearney and Amy Ganz, 52–77. Washington, DC: Aspen Institute, 2021.
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About The Authors

Samuel G. Hanson

Finance
→More Publications

Adi Sunderam

Finance
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    Shared Models in Networks, Organizations, and Groups

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    Segmented Arbitrage

    By: Emil Siriwardane, Adi Sunderam and Jonathan L. Wallen
More from the Authors
  • Demand-and-Supply Imbalance Risk and Long-Term Swap Spreads By: Samuel G. Hanson, Aytek Malkhozov and Gyuri Venter
  • Shared Models in Networks, Organizations, and Groups By: Joshua Schwartzstein and Adi Sunderam
  • Segmented Arbitrage By: Emil Siriwardane, Adi Sunderam and Jonathan L. Wallen
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