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Norwegian and U.S. Policies Alleviate Business Vulnerability Due to the COVID-19 Shock Equally Well

Author

Listed:
  • Annette Alstadsæter
  • Julie Brun Bjørkheim
  • Wojciech Kopczuk
  • Andreas Økland

Abstract

We use Norwegian administrative data and applications for emergency government support to simulate the magnitude and distribution of business revenue shock due to the COVID-19 pandemic. We rely on it to analyze the impact of business support policies available in Norway and the United States by comparing simulated results from the various policies on a common data set. We find that policies supporting payroll and fixed costs that were available in both countries have a similar impact of reducing firms’ economic distress, by cutting the negative effect of the crisis on profitability, liquidity, and solvency by more than a half.

Suggested Citation

  • Annette Alstadsæter & Julie Brun Bjørkheim & Wojciech Kopczuk & Andreas Økland, 2020. "Norwegian and U.S. Policies Alleviate Business Vulnerability Due to the COVID-19 Shock Equally Well," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 805-828, September.
    • Handle: RePEc:ntj:journl:v:73:y:2020:i:3:p:805-828
    DOI: 10.17310/ntj.2020.3.08
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    Cited by:

    1. Oikonomou, Myrto & Pierri, Nicola & Timmer, Yannick, 2023. "IT shields: Technology adoption and economic resilience during the COVID-19 pandemic," Labour Economics, Elsevier, vol. 81(C).
    2. Deiana, Claudio & Geraci, Andrea & Mazzarella, Gianluca & Sabatini, Fabio, 2022. "Can relief measures nudge compliance in a public health crisis? Evidence from a kinked fiscal policy rule," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 407-428.
    3. Robert W. Fairlie & Frank Fossen, 2021. "Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of COVID-19?," NBER Working Papers 28321, National Bureau of Economic Research, Inc.
    4. Kozeniauskas, Nicholas & Moreira, Pedro & Santos, Cezar, 2022. "On the cleansing effect of recessions and government policy: Evidence from Covid-19," European Economic Review, Elsevier, vol. 144(C).
    5. repec:aei:rpaper:1008582843 is not listed on IDEAS
    6. Glenn Hubbard & Michael R. Strain, 2020. "Has the Paycheck Protection Program Succeeded?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(3 (Fall)), pages 335-390.
    7. Didier, Tatiana & Huneeus, Federico & Larrain, Mauricio & Schmukler, Sergio L., 2021. "Financing firms in hibernation during the COVID-19 pandemic," Journal of Financial Stability, Elsevier, vol. 53(C).
    8. Dinara Alpysbayeva & Annette Alstadsæter & Wojciech Kopczuk & Simen Markussen & Oddbjørn Raaum, 2024. "Misreporting in the Norwegian business cash support scheme," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(6), pages 1463-1493, December.
    9. Deiana, Claudio & Geraci, Andrea & Mazzarella, Gianluca & Sabatini, Fabio, 2021. "COVID-19 Relief Programs and Compliance with Confinement Measures," IZA Discussion Papers 14064, IZA Network @ LISER.
    10. Steffen Juranek & Jörg Paetzold & Hannes Winner & Floris Zoutman, 2021. "Labor market effects of COVID‐19 in Sweden and its neighbors: Evidence from administrative data," Kyklos, Wiley Blackwell, vol. 74(4), pages 512-526, November.
    11. Gärtner, Leo & Marek, Philipp, 2022. "The impact of German public support transfers on firm finance: Evidence from the Covid-19 crisis," Discussion Papers 19/2022, Deutsche Bundesbank.
    12. Wei Cui & Jeffrey Hicks & Max Norton, 2022. "How well-targeted are payroll tax cuts as a response to COVID-19? evidence from China," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(5), pages 1321-1347, October.
    13. Elías Albagli & Andrés Fernández & Juan Guerra-Salas & Federico Huneeus & Pablo Muñoz, 2023. "Anatomy of Firms’ Margins of Adjustment: Evidence from the COVID Pandemic," Working Papers Central Bank of Chile 981, Central Bank of Chile.
    14. Tønnessen, Øystein & Dhir, Amandeep & Flåten, Bjørn-Tore, 2021. "Digital knowledge sharing and creative performance: Work from home during the COVID-19 pandemic," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    15. Robert Fairlie & Frank M. Fossen, 2022. "Did the Paycheck Protection Program and Economic Injury Disaster Loan Program get disbursed to minority communities in the early stages of COVID-19?," Small Business Economics, Springer, vol. 58(2), pages 829-842, February.

    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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