COVID ECONOMICS VETTED AND REAL-TIME PAPERS ISSUE 29 16 JUNE 2020 POLICY COMMUNICATION Olivier Coibion, Yuriy Gorodnichenko and Michael Weber MONEY MARKET FUNDS Lei Li, Yi Li, Marco Macchiavelli CRIMINALITY AND LOCKDOWNS and Xing (Alex) Zhou Rubén Poblete-Cazenave FISCAL POLICY THE LABOUR MARKET Christian Bredemeier, Falko Juessen Jake Bradley, Alessandro Ruggieri and and Roland Winkler Adam H. Spencer Covid Economics Vetted and Real-Time Papers Covid Economics, Vetted and Real-Time Papers, from CEPR, brings together formal investigations on the economic issues emanating from the Covid outbreak, based on explicit theory and/or empirical evidence, to improve the knowledge base. Founder: Beatrice Weder di Mauro, President of CEPR Editor: Charles Wyplosz, Graduate Institute Geneva and CEPR Contact: Submissions should be made at https://portal.cepr.org/call-papers- covid-economics. Other queries should be sent to [email protected]. 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However, the pandemic also raises a number of complex ethical issues. Economists tend to think about trade-offs, in this case lives vs. costs, patient selection at a time of scarcity, and more. In the spirit of academic freedom, neither the Editors of Covid Economics nor CEPR take a stand on these issues and therefore do not bear any responsibility for views expressed in the articles. Submission to professional journals The following journals have indicated that they will accept submissions of papers featured in Covid Economics because they are working papers. Most expect revised versions. This list will be updated regularly. American Economic Review Journal of Econometrics* American Economic Review, Applied Journal of Economic Growth Economics Journal of Economic Theory American Economic Review, Insights Journal of the European Economic American Economic Review, Association* Economic Policy Journal of Finance American Economic Review, Journal of Financial Economics Macroeconomics Journal of International Economics American Economic Review, Journal of Labor Economics* Microeconomics Journal of Monetary Economics American Journal of Health Economics Journal of Public Economics Canadian Journal of Economics Journal of Political Economy Economic Journal Journal of Population Economics Economics of Disasters and Climate Quarterly Journal of Economics* Change Review of Economics and Statistics International Economic Review Review of Economic Studies* Journal of Development Economics Review of Financial Studies (*) Must be a significantly revised and extended version of the paper featured in Covid Economics. Covid Economics Vetted and Real-Time Papers Issue 29, 16 June 2020 Contents Does policy communication during COVID work? 1 Olivier Coibion, Yuriy Gorodnichenko and Michael Weber Runs and interventions in the time of Covid-19: Evidence from money funds 50 Lei Li, Yi Li, Marco Macchiavelli and Xing (Alex) Zhou Bringing back the jobs lost to Covid-19: The role of fiscal policy 99 Christian Bredemeier, Falko Juessen and Roland Winkler The Great Lockdown and criminal activity: Evidence from Bihar, India 141 Rubén Poblete-Cazenave Twin peaks: Covid-19 and the labor market 164 Jake Bradley, Alessandro Ruggieri and Adam H. Spencer 1 Covid Economics Issue 29, 16 June 2020 Does policy communication during COVID work?1 Olivier Coibion,2 Yuriy Gorodnichenko3 and Michael Weber4 Date submitted: 11 June 2020; Date accepted: 12 June 2020 Using a large-scale survey of U.S. households during the Covid-19 pandemic, we study how new information about fiscal and monetary policy responses to the crisis affects households’ expectations. We provide random subsets of participants in the Nielsen Homescan panel with different combinations of information about the severity of the pandemic, recent actions by the Federal Reserve, stimulus measures, as well as recommendations from health officials. This experiment allows us to assess to what extent these policy announcements alter the beliefs and spending plans of households. In short, they do not, contrary to the powerful effects they have in standard macroeconomic models. Covid Economics 29, 16 June 2020: 1-49 Covid Economics 1 We thank the National Science Foundation for financial support in conducting the surveys. We also thank Shannon Hazlett and Victoria Stevens at Nielsen for their assistance with the collection of the PanelViews Survey. Results in this article are calculated based on data from The Nielsen Company (US), LLC and marketing databases provided by the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. Information on availability and access to the data is available at http://research.chicagobooth.edu/ nielsen. The randomized control trial is registered at the AER RCT Registry (#AEARCTR- 0005989). 2 Professor of Economics, UT Austin. 3 Professor of Economics, UC Berkeley. 4 Associate Professor of Finance, University of Chicago Booth School of Business. Copyright: Olivier Coibion, Yuriy Gorodnichenko and Michael Weber COVID ECONOMICS VETTED AND REAL-TIME PAPERS 2 “The single biggest problem in communication is the illusion that it has taken place.” – George Bernard Shaw. “[for monetary policy to be most effective] not only do expectations about policy matter, but, at least under current conditions, very little else matters." Woodford (2005) I. Introduction Monetary