MORIMOTO KEIICHI    Department   Undergraduate School  , School of Political Science and Economics    Position   Associate Professor
Date	2021/10/10
Presentation Theme	Ambiguity, sector specific disasters, and asset prices during COVID-19 pandemic
Conference	The 2021 Autumn Meeting, Japanese Economic Association
Conference Type	Domestic
Presentation Type	Speech (General)
Contribution Type	Individual
Venue	Osaka University
Publisher and common publisher	Keiichi Morimoto, Shiba Suzuki
Details	Using an asset pricing model of a multi-sector production economy with pandemic disasters, we explain the average stock price boom and signifi- cant cross-sectional variation of stock returns in the US and Japan during the COVID-19 pandemic recession. Two features of the pandemic, ambigu- ity and sector-specific shocks, are crucial determinants of the unusual asset price dynamics. Extending the model, we analyze the welfare effects of lockdown policies during pandemics for heterogeneous households and ob- tain the following results. Enforcing a lockdown improves the welfare of the asset-holders and the household working in the sector with positive sector- specific shocks. A Pareto optimal lockdown policy controls the tightness of the lockdown so as to maximize the welfare of the household working in the sector with negative sector-specific shocks.