Publications
Publications
- 2021
- Rebuilding the Post-Pandemic Economy
Business Continuity Insurance in the Next Disaster
By: Samuel Gregory Hanson, Adi Sunderam and Eric Zwick
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
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.