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The Zombification of the Economy? Assessing the Effectiveness of French Government Support During COVID-19 Lockdown

Author

Listed:
  • Mattia Guerini

    (UniBs - Università degli Studi di Brescia = University of Brescia)

  • Lionel Nesta

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Xavier Ragot

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Stefano Schiavo

    (UNITN - Università degli Studi di Trento = University of Trento)

Abstract

This paper evaluates the risk of zombification of the French economy during the sanitary crisis, as a result of the unconditional financial support provided to firms by public authorities. We develop a simple theoretical framework based on a partialequilibrium model to simulate the liquidity and solvency stress faced by a large panel of French firms and assess the impact of government support measures. Simulation results suggest that those policies helped healthy but illiquid firms to withstand the shock caused by the pandemic. Moreover, the analysis finds no evidence of a "zombification effect", as government support has not disproportionately benefited less productive companies.

Suggested Citation

  • Mattia Guerini & Lionel Nesta & Xavier Ragot & Stefano Schiavo, 2022. "The Zombification of the Economy? Assessing the Effectiveness of French Government Support During COVID-19 Lockdown," Working Papers hal-04288928, HAL.
    • Handle: RePEc:hal:wpaper:hal-04288928
    Note: View the original document on HAL open archive server: https://univ-cotedazur.hal.science/hal-04288928v1
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    Cited by:

    1. is not listed on IDEAS
    2. Masayuki MORIKAWA, 2025. "Performance of Firms Using COVID-19-related Support Policies: Ex-post evaluation," Discussion papers 25107, Research Institute of Economy, Trade and Industry (RIETI).
    3. Turco, Enrico & Bazzana, Davide & Rizzati, Massimiliano & Ciola, Emanuele & Vergalli, Sergio, 2023. "Energy price shocks and stabilization policies in the MATRIX model," Energy Policy, Elsevier, vol. 177(C).
    4. Turco, Enrico & Bazzana, Davide & Rizzati, Massimiliano & Ciola, Emanuele & Vergalli, Sergio, "undated". "Energy price shocks and stabilization policies in a multi-agent macroeconomic model for the Euro Area," FEEM Working Papers 324171, Fondazione Eni Enrico Mattei (FEEM).
    5. Lily Davies & Mark Kattenberg & Benedikt Vogt, 2023. "Predicting Firm Exits with Machine Learning: Implications for Selection into COVID-19 Support and Productivity Growth," CPB Discussion Paper 444, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

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    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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