Thread by @PIIE

🇺🇸THREAD🇫🇷
Economic responses to the #COVID19 crisis varied widely. In their latest research, @pisaniferry & @cohensetton look at French & US responses & find that the US response was 💰more expensive💰 but 📉less effective📉 than the French approach.
We explain... (1/11)

Taking all policy responses into account, the size of the US fiscal package to support households is nearly twice as large as the French package, as proportion of each country's GDP:
🇺🇸: 6.3% of GDP
🇫🇷: 3.4% of GDP
(2/11)

The American job retention schemes are about 50% more expensive than the French counterpart, chômage partiel. The difference is explained by the differences in efficiency of the schemes, not the actual magnitude of relief provided. (3/11)

Another big difference comes from discretionary enhancements and complements to existing social safety nets, amounting to 2.1% of GDP in the US compared to 0.5% of GDP in France. (4/11)

With chômage partiel replacing the largest part of standard unemployment benefits in France, traditional built-in countercyclical government receipts and expenditures provide slightly more income support in the United States than in France, but the difference is small. (5/11)

The French chômage partiel scheme existed before the coronavirus crisis but new rules made it more generous.
In the US, 3 programs were introduced in response to the crisis: the Paycheck Protection Program, the Payroll Support Program, & the Employee Retention Tax Credit. (6/11)

The main finding is that, taking into account both automatic income stabilization mechanisms and discretionary measures, the US #COVID19 package is almost twice as large as the French package, BUT has proven less effective because of poor design and implementation. (7/11)

Both the US and French legislatures acted to "plug holes" in social insurance systems, but given the size of existing schemes in France, the French had to act to a much lesser extent than the US, offering a bigger bang for their buck (or euro, in this case). (8/11)

Higher US spending did not significantly slow the unemployment rate, which has increased by almost 10 percentage points over the past three months. By contrast, the French unemployment rate has increased by less than 2 percentage points. (9/11)
#PIIECharts

That being said, the fact that the US approach has fallen short should not diminish the significance of the policy shift signaled by the enactment of measures to maintain household income. (10/11)

For many more details, tables, charts, and an explanation of the methodology, check out the Policy Brief: (11/11)
piie.com/publications/p…