MORIMOTO KEIICHI    Department   Undergraduate School  , School of Political Science and Economics    Position   Associate Professor
Date	2021/12/13
Presentation Theme	Ambiguity in a pandemic recession, asset prices, and lockdown policy
Conference	WINPEC Macroeconomics Workshop
Promoters	Waseda Institute of Political Economy
Conference Type	Workshop/Symposium
Presentation Type	Speech (Invitation/Special)
Contribution Type	Individual
Venue	Waseda 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.