How many Irish homes are in negative equity?

Just over 500,000 thousand homes have been built since the start of 2002. Probably the same number again of second-hand homes have been bought in the same period. With the guts of one million properties having changed hands since 2002, how many of those are worth less than now than when they were bought? And how many owners find themselves owing more to the banks than they if they had to sell now?

Taking the daft.ie asking prices by county from 2006 on, and Dept of Environment regional figures before that, it’s possible to construct regional average prices going back in the 1980s. Fortunately, we don’t have to go back that far – but we do have to go back into the first half of this decade. By my calculations, of the half a million homes built since 2002, about 50% are now worth less than when they were bought. That’s based on current asking prices. If asking prices are – as some contend – about 10% above actual closing prices at the moment, the number of homes worth less now than when they were bought rises to 340,000 homes – or two thirds of the houses built since the start of 2002.

But that’s only half the story. Or slightly less actually, as loans for new homes account for just under 50% of all loans. If that ratio is correct, another 286,000 second hand homes now have asking prices less than the prices they were bought for. Again, if asking prices are 10% above what’s actually trading out there, that figure rises to about 382,500. In total, that represents about 725,000 homes that have been bought since 2004 that are now worth less. Depending on whether you take Census or Dept of the Environment figures, that represents between 37% and 43% of homes in the country. Put in plain English, two in five homes in Ireland are worth less now than when they were bought.

How far back has Ireland’s property market rewound? The graph below shows average home values in eight regions for the period 2002-2009. There are three shades of colour used – the lightest (further to the right) are house price gains that been wiped out, the medium shade represents current asking price levels, while the full colour lines represent asking prices less 10%. Overall, the asking price for the typical home in Ireland now is similar to what the home was worth in March 2005. If you believe asking prices are overstating true prices, the typical home in Ireland is now worth the same as it was in July 2004. The two years of bust have undone the last two and a half years of boom. Homes in Connacht and Ulster are worst affected – they are worth the same now as they were five years ago in early 2004.

When were Irish homes last worth what they're worth now?

When were Irish homes last worth what they're worth now?

Negative equity is, however, something more particular. It refers to the outstanding debt that someone owes the bank. In other words, if they sold the house now, would they be able to pay off the remaining debt from the sale price? Naturally, this is a much more complicated exercise. Dept of Environment figures suggest that the typical loan-to-value of new homes since 2002 has been about 75%, while for second-hand homes it’s been closer to 73%. Fortunately, the figures give something of a breakdown. Making some ballpark assumptions for different years, for example any 95%+ mortgage in 2004 or any 70%+ mortgage in 2007/2008, it’s possible to give a rough estimate of the number of homes in negative equity.

Roughly speaking, about half of the homes that are now worth less than when they were bought are in negative equity, in the financial sense of the word. (This makes intuitive sense, as two out of every five mortgages is less than 70%, suggesting a substantial amount of households with some equity still knocking around.) That’s 340,000 homes where if the homeowners have to sell, they will not be able to pay the bank back solely through the money they get from selling the house.

The punchline is that about one in five homes in Ireland is now in negative equity.

Are more open countries being hit harder in the recession?

This morning, the ESRI has published its latest Quarterly Economic Commentary, which led to George Lee being pushed on Morning Ireland into saying Ireland was the “worst in the developed world” when it came to economic contraction. Fortunately, within the last week, the IMF has produced its latest World Economic Outlook, “Crisis & Recovery“. This contains the latest predictions by the Washington-based organisation on economic output for all countries for this year out to 2014… although to be fair, the focus from most people is understandably on 2009, rather than 2014.

The map below – fully available on Manyeyes – shows estimated GDP growth (or not) by country in 2009, the worst year for the world economy since World War II. Speaking of war, while 27 countries are predicted to have strong growth in 2009, many of them are post-conflict countries, presumably with a lot of spare capacity and/or natural resources, such as Afghanistan, Congo, Ethiopia, Iraq, Laos, Myanmar and Timor Leste. A couple more are simple cases of natural resource-driven economies, such as Qatar and potentially Turkmenistan and Uzbekistan.

GDP growth, 2009 (Source: IMF)

GDP growth, 2009 (Source: IMF)

Large swathes of the world, almost 70 countries in total, are blue, meaning GDP contraction in 2009. These are concentrated particularly in developed and transition markets, as well as the larger economies of Latin America. A dozen economies face GDP contractions of greater than 5% this year. While Ireland is on the list, it is not a sore thumb, particularly when one looks at countries such as Iceland, Estonia and Singapore, also small open economies. In fact, the whole list of those worst affected this year reads, unfortunately, like a Who’s Who of Washington Consensus poster boys from earlier in the decade:

  • Botswana – one of Africa’s few success stories over the past two decades, growing at more than 8% a year until recently
  • Estonia, Latvia and Lithuania – three small open economies that had bought heavily into the dream of European integration
  • Iceland – no explanation needed, unfortunately
  • Ireland – end of the exporting good days… or end of the domestic boom?
  • Japan – one of two large economies on the list, facing collapsing export values
  • Russia – the other giant on the list, hit more heavily than other resource economies
  • Seychelles – a relatively successful and open economy, coming down from a heady 2006/2007 boom
  • Singapore and Taiwan –  two of Asia’s most successful exporters in the good days
  • Ukraine – again, a very strong economic performance since 2000, with natural resources playing their part

Largely speaking, these, the worst hit economies of the 2009 recession, are open economies and in many cases small ones too. I thought it would be worth investigating across the entire pool of almost 200 economies whether there was a correlation between 2009 performance and (1) openness and (2) 2001-2007 ‘trend’ growth. The full visualization is here (you can play with the axes, highlight your own country – Ireland highlighted below, flip the chart, etc..), but for the overall story, see below.

Openness & Growth, 2001-2009

Openness & Growth, 2001-2009

A quick guide to how to read it:

  • The further down a country is, the greater its GDP contraction this year. (Qatar’s expected phenomenal 20% growth this year – oh, to have gas reserves! – actually stretches out the axes a little more than ideal.)
  • The further to the right a country is, the more open it is, as measured by World Bank trade-GDP ratios. (The three trade-a-holics, Singapore, Hong Kong and Luxembourg, again stretch this out a little – closely followed, incidentally, by the Seychelles.)
  • And if two dimensions weren’t enough, the size of the bubble represents average growth between 2001 and 2007.

While not a perfect correlation, it’s pretty clear that more open economies are facing into tougher economic times. Two quick and related concluding remarks. Firstly, a second glance back at the map shows that Africa and Asia are the best performing continental economies this year. I doubt it’s a coincidence that the vast bulk of population growth over the coming two decades will be from these two regions. The slow but steady formalization of markets continues under the radar in both.

The second point builds on this. The story we were all sold in 2007 was one of decoupling. “No matter if the US and Europe go into recession,” went the story, “because the BRICs will rescue us.” Brazil and Russia in particular did not pass that test, but China and India have fared better. Both economies do look like coming in about 5 percentage points below 2001-2007 trend growth this year, which may certainly feel recession-esque, particular with global euphoria and expansion a thing of the past. Nonetheless, they are still among the fastest growing economies in the world, forecast at above 5% in 2009. China and India are also by the largest of the BRIC countries, with almost 30% of the world’s population, suggesting that they have a critical mass of domestic demand that Brazil and Russia lack.

Are Irish workers undertaxed?

Recently, an ad for Liveline included an angry woman, decrying Ireland as a ‘high tax’ economy. Her argument was: “What’s the point in working if the government is just going to take all our money anyway?” That baffled me. As far as I knew, Ireland was certainly not a high-tax economy, certainly compared to some of the Scandinavian economies. I decided this was worth a closer look. Just how much of a low-tax economy is Ireland? And – given the €25bn gaping hole in the budget is going to have to be solved through a mixture of both expenditure cuts and tax increases – are Irish workers undertaxed?

The graph below shows the average “all-in” personal income tax rate levied on people who earn the average industrial wage, for a range of economies including Ireland, from 2000 on. The figure given is an average tax rate for four stylised households (a single worker with no children, a single worker with two children, a married couple with one earner and no children and a one-earner couple with two children). The figure for each economy includes family cash transfers, paid in respect of dependent children between five and twelve years of age. All figures come from the OECD.

Average 'all-in' personal tax rates, selected economies, 2000-2007

Average 'all-in' personal tax rates, selected economies, 2000-2007

Amazingly, in 2007, Ireland would have negatively taxed the four households, supplementing their income by 0.2% on average. Needless to say, negative tax is not the norm, certainly not for the average worker. Ireland is out of line with every other developed OECD economy. Our closest competitors, in terms of not taxing the average worker, are the Czech Republic and Korea – but both of those have an average tax rate for the four cases above of just over 10%.

Excluding child benefit, Ireland is still the lowest taxer, but the gap between us and the rest of the developed world narrows substantially. But including child benefit or excluding it, Ireland taxes its average worker the least of the 28 developed economies in the OECD in six of the seven different measures of average ‘all-in’ tax that the OECD produces. Only for single workers without children did one country, Korea, tax less than Ireland in 2007.

It could be argued that the use of manufacturing wages for Ireland – compared to a broader definition of ‘industrial average’ in most other OECD economies – could be affecting the result as it lowers Ireland’s average wage. That may be the case, and would affect the level of Ireland’s line in the graph above – but it wouldn’t substantially alter the trend. Ireland was already one of the lowest taxers in the OECD in 2000 and yet it cut its taxes by twice as much as any other economy.

This pattern since 2000 is important for where we are now, because a common explanation of how Ireland got into its fiscal mess is over-reliance on receipts from property taxes. That’s certainly true, but this wasn’t a passive over-reliance. This wasn’t a case of leaving the rest of the economy as-is and just not realising the once-off nature of the property tax windfall. This was very much an active over-reliance on property. The economy and the tax system was actively re-ordered based on a presumption that receipts from a property transaction tax and related sources would be the centre of the new economy. This was done with what seems like a reckless determination to tax workers less and less, without a due consideration of the sustainability of that policy.

I’m not saying that we should have high taxes for the sake of it. For one thing, direct taxation is only one part of the story – Ireland’s indirect tax rate (i.e. VAT) is one of the higher rates in the OECD (although it’s certainly not out of line). In fact, I’m not necessarily arguing that income tax rates need to go up. I can find only country in the OECD – the Netherlands – where the top rate of tax is above 50%. The Czech Republic, for example, which manages to get 10% in tax on the measure above, only taxes 32% at the top rate.

What I’m arguing is that we need to look again at our thresholds, i.e. at what point on the income scale do we start taxing people. We’ve got ourselves into this mess since 2000 and we certainly need to get ourselves back out.

How many months supply is sitting on the property market?

The US leads the way for many types of statistics – and in particular for their timeliness. The housing market is no different, with a plethora of measures such as prices and volume of transactions out every month.

In Ireland, though, we have to labour under a dearth of timely statistics on a range of economic indicators – including the housing market. Naturally, the Daft Report tries to make its contribution, publishing one week after quarter’s end so that people have the latest asking price and stock/flow information. One that I’m increasingly asked for is the number of months of supply currently sitting on the property market, a measure that’s well established in the US. It’s probably time we tried to put some numbers on it.

To do that, we need to answer two questions. The first is: what is a normal volume of transactions for the Irish property market? The second is: how many are on the market now?

On the first, the natural way to go about it would be to use the recent level of transactions. The only problem with that, though, is that the number of transactions has fluctuated wildly over the past four years, making that a somewhat erratic measure. To counteract that, the Department of the Environment have a long-run series on loan approvals, which for all intents and purposes tells us how many people are buying property every year. The numbers still vary hugely over the past two decades, in line with the vicissitudes of Ireland’s property market. In 1990, there were just 35,000 transactions – less than 3,000 a month – while in 2005, there were over three times as many transactions, 120,000 in total.

Taking the 2005 figure – or indeed anything since about 2000 – leaves open the accusation that one is deliberately underestimating the problem by overestimating the “typical” month. Then again, anything pre-1999 – and certainly anything close to 1993 – is probably not too appropriate either. To overcome this, one can view the last 15 years of Ireland’s property market as two stylized periods: a (relatively) healthy property market in the 1990s, where monthly transactions averaged 4,400, and a hyperactive property market, 2000-2007, where monthly transactions averaged 7,800.

Using the 2000-2007 figure gives us a lower bound, while using the 1993-2000 gives an upper bound. Given that Ireland is the guts of 700,000 residents bigger now than in 1993 (even allowing for outward migration), it probably makes sense to use the average of the two figures (about 6,000 transactions a month) as some sort of post-2007 reasonable estimate of what one could expect would pass through the market in a healthy post-crunch Ireland.

To answer the second question, how many properties are currently on the market, I’ve taken the daft.ie series of stock of property for sale. An adjustment has been made, given the way new developments are listed on the site, to make sure that vacant new builds are better captured than the raw figures may suggest.

After all those preparations, where are we? The chart below shows the best estimate (orange) of the number of months property sitting on the market from early 2007 to April 2009 – alongside upper (red) and lower (green) bounds, based on whether one believes that the 2000-2007 level of transactions is ‘normal’ or in fact when everything dies down we’ll see a return to much lower 1993-1999 levels of transactions instead.

Estimated number of months supply on Ireland's property market

Estimated number of months supply on Ireland's property market

In a normal property market, one might expect to see three or four months supply sitting on the market – that’s about how long it takes for a property to go through the cycle of litsing, viewing, agreement, closure. The graph above – if you accept the middle ground presented – is that there has been a over a year’s supply of property sitting on the market since this time last year, compared to about 5 months at the start of 2007.

Good news? These days, good news is really just absence of new bad news! The good news is that while there is about three times as much property on the market as normal, this has levelled off – and indeed fallen slightly – in the last six months.

Protectionist backlash or falling consumer demand: Is the world in danger of deglobalization?

What if unemployment in Ireland reaches 25% next year? What if GDP falls a quarter between 2007 and 2012? The spectre of the Great Depression looms over us large at the moment and there has been much commentary of late – see for example Robert Samuelson’s recent blog post – on whether and how our current global recession/depression compares with the last one of similar scale, that of the 1930s.

Is it pointless spooking of the public or is it a relevant comparison worth exploring further? Recently, Kevin O’Rourke and Barry Eichengreen make the case that the comparison is at least worthy of further investigation in an analysis of some key global indicators, including output, stock markets and interest rates, comparing ‘now’ and ‘then’. Their conclusion was that “world industrial production, trade, and stock markets are diving faster now than during 1929-30″ – something that previous US-centric comparisons hadn’t concluded. One thing that worried me as a student of the history of globalization was the inclusion of trade in that set of statistics. Here is O’Rourke and Eichengreen’s Figure 3, Trade Then and Now, which worried me so much:

World trade then and now - Source O'Rourke/Eichengreen 2009

World trade then and now - Source: O'Rourke/Eichengreen 2009

Are things that bad? Is the world going to “deglobalize”? Is trade going to collapse and bring us – in a trade-dependent Ireland and a trade-dependent world – unemployment, poverty and misery along similar lines as the world saw in the 1930s?

The first thing to know is whether or not the world is more globalized in trade terms now than it was in the 1920s and 1930s. This may seem like a dumb question at first: just as the world is more urbanized and more industrialized on a totally different scale now compared to a century ago, surely it’s more globalized too, right? But those who research globalization have shown that it’s rowed back and forth over the decades and centuries, whether one looks at trade, migration or capital markets.

For example, as Kevin O’Rourke writes elsewhere with two co-authors, the globalization of international investment was greater in 1914 than it was at any point later until the early 1970s. “Deglobalization” of capital markets meant that while foreign assets accounted for nearly 20% of world GDP during 1900-14, the 1930-1960 figure was just 5-8%, similar to levels in 1870.

A table in the same paper outlines trade and the integration of goods markets in the pre-1914 period. The best estimate for Europe is that the trade-output ratio – how much of what was produced was traded – increased from 30% in 1870 to 37% in 1914. What happened next? In particular, what happened in the Great Depression and how does that compare with now? The graph below shows two lines, the orange line being the world trade-output ratio from 1991 to 2013, as estimated by the IMF’s World Economic Outlook. The blue line is my own estimate, based on Mitchell’s Historical Statistics and research I did while in Trinity, of the global trade-GDP ratio in the 1920s and 1930s, using 25 prominent economies (not dissimilar to a proto-OECD).* The shaded part shows the future, for the orange line – i.e. 2009 on.

Global trade-output ratios across the two Depressions

Global trade-output ratios across the two Depressions

Three things strike me:

  • The first thing to notice is that in 1991, one third of what was produced globally was traded. The world was about as globalized in 1991 as the OECD was in the mid-1920s and as Europe was in 1900. So we certainly not talking exponentially different levels of trade intensity now compared to a century ago – probably just greater geographical spread.
  • Protectionism, deglobalization and the destruction of trade kicked in in the early 1930s. The change was a steady four-year shift to a new lower level of trade intensity. For all intents and purposes, the Great Depression led to a halving of how integrated global trade markets were.
  • The world’s global trade intensity since 1991 has been marked – it has essentially doubled, meaning that almost two thirds of what is produced is now traded. Not only that, unlike in the 1930s when trade intensity almost halved, global integration of trade markets is likely to increase over the coming years of global recession and recovery, if the IMF’s latest statistics are to be believed.

Does this make any sense? How can trade in 2009 be falling faster than it did in 1929 – at the start of a period of dangerous protectionsim – and yet the world is still globalizing? Mathematically, the answer has to be that trade is contracting, but slower than output. Economically, the answer – I think – is that trade is much more integrated into daily life now than then. Or put another way, trade in the 1920s and 1930s was more easily substitutable than now. Globally integrated supply chains and consumer networks mean that when output falls now, trade falls – and vice-versa, as countries are trade-dependent. Just look at Japan’s exports – that to me tells a story of global consumers cutting back on buying new cars, not British or German consumers deciding to buy local rather than buy Japanese cars.

So, having looked at the stats, I’m a little less worried than before. Firstly, politicians seem much more acutely aware of the dangers of protectionism now (… although perhaps a historian can correct me on the political economy of the early 1930s). Secondly, while 1920 and 1990 were not dissimilar starting points, in terms of the level of trade intensity, we have entered our recession at a different level of trade intensity than our forebears 80 years ago. While the 1920s were a stuttering decade for global trade, the nineties and naughties have seen solid expansion of trade networks. The 20-year build-up before recession set in, coupled with the technologically-enabled disaggregation of value chains, has created global trade networks of a much more integrated nature than those of the 1930s. It would be much harder now – even if we all wanted to – to destroy our trading networks, as we’d be trimming our own consumption possibilities far more than consumers had to back in the 1930s. Hopefully, my optimism is not misplaced.

* For those interested in the details, the 25 counties were weighted by their non-agricultural labour force, to strike a balance between GDP and population weightings.

(PS. I still think a comparison of the real economy effects of the financial crisis of the early 1870s is worth a go… Here’s hoping I’ll find the time!)

Tackling the thorny issue of teachers pay

Earlier this year, I calculated average salary estimates for the public and private sectors in Ireland. The answer, that the average worker in the private sector earned €40,000 last year, almost €10,000 less than their public sector counterpart, has proved if not controversial than certainly a starting point for debate. Given some of the comments on that blog post, and the fact that the teachers conferences were being held last week, I decided to look in a little more depth at the education sector. How much do teachers in Ireland earn? How does this compare with other people in Ireland? How do teachers’ salaries in Ireland compare with other eurozone teachers?

Trade unions have been clear on one point since the size of Ireland’s fiscal crisis became clear: those most in a position to pay should bear the brunt. At the same time, teachers unions have said that their pay is not up for discussion. This implies that teachers presume that they are not among those most in a position to pay. How does that stack up with the stats? The chart below shows average earnings in mid-2007, the latest data across all sectors, with public sectors marked in dark blue, private sectors in light blue, and semi-state in mixed blue.

Salaries by sector in Ireland, 2007 (source: cso.ie)

Salaries by sector in Ireland, 2007 (source: cso.ie)

The single most striking thing is that all the best paid sectors in Ireland are either public or semi-state industries. (Those looking for more detail might start with Dept of Education figures out last week showing that primary school teachers earn on average €57,000.) Surely, any objective trade union leader should be arguing that whatever burden workers have to bear, the bulk of it should be borne primarily by the public and semi-state sectors.

There are a few common queries people have with the relevance of these statistics. The first often runs: “Hang on, you’re not comparing like with like. All teachers have a degree, while who knows how many people do in, say, paper and printing.” Ideally, I’d like to have the stats to hand to explore this. Unfortunately I don’t. My only comment before we move on is that if finance and business services had come out as the best paid sectors in Ireland, would the same people have argued that we should wait and see whether their higher wages were justified by qualifications/experience/profit created? Or would people have argued that as they were best paid, they should pay most?

Let’s move on, though. If comparing education with other sectors in Ireland is not fair, let’s compare Irish teachers with their eurozone counterparts? After all, our old trick in situations like this was just to devalue and hope for the best. Now we share a currency with a dozen or so other countries. Are our teachers overpriced?

The graph below uses OECD statistics to examine teachers’ salaries across the eurozone. (I’ll take this chance to recommend the OECD’s Education at a Glance 2008: even if you hate absolutely everything I’m saying here, do take the opportunity to wander around its facts and figures.) In Ireland, a teacher in the job 15 years, single with no kids, earns more after tax than his or her counterparts do BEFORE they’ve been taxed in most other eurozone members. Marry that teacher off and give them two kids and – despite Germany’s best efforts to catch up – Irish teachers are by far the best paid of the ten eurozone countries shown.

Average salaries (gross and net) for teachers in the eurozone, 2007

Average salaries (gross and net) for teachers in the eurozone, 2007

OK, so Irish teachers are well paid relative to other Irish workers – they may just be better qualified. And yes, they’re paid substantially more than their eurozone counterparts. Perhaps price levels are so substantially higher in the rip-off republic that teachers in Ireland need this extra pay just to break even? Unfortunately, eurostat figures on comparative price levels don’t back that assertion up. Whereas prices in Ireland are indeed 15% higher than in France, the single teacher above enjoys 75% more take-home pay. In Finland, prices are just 2% below Irish prices, but an Irish teacher enjoys a wage that is 54% higher than a Finnish counterpart.

If prices don’t explain the international gap, maybe Irish teachers work a longer year than their eurozone counterparts, explaining why they get paid more. Unfortunately again for Irish teachers, the opposite seems to be the case, as the graph below shows. Teachers – particularly secondary school teachers – work less days on average than almost all their eurozone counterparts. This leaves the amount paid for every day spent teaching in Ireland looking pretty unsustainable. Factoring in the pension levy only scratches at the surface of the problem.

Days taught by teachers and earnings per day of teaching

Days taught by teachers and earnings per day of teaching

Ireland is currently grappling with a huge fiscal and economic crisis. The government faces lots of tough choices about what stays and what must go. The fact that they’ve chosen to cut back some education services suggests that they are missing what should be obvious: the more we bring Irish teachers’ salaries back in line with counterparts elsewhere in the eurozone, as well as with other sectors in Ireland, the less we’ll have to cut back on the range of education services we offer.

As teachers of maths should appreciate, the arithmetic is simple. The government needs to make savings across the board in publicly-funded services, including education. To make savings in education, we can either cut back on education services (quantity) or cut back on teachers salaries (price). Teachers have so far been successful in passing those two issues off as one, and thus creating a somewhat bizarre alliance of service providers (teachers) and consumers (parents/children).

Given how Irish teachers’ pay compares domestically and internationally, it’s time we separated out teachers’ pay from education cutbacks and took a long cold look at what our teachers are paid.

A brand new scare graph – Japan’s collapsing exports

I have just discovered a set of global trade statistics updated monthly by the Dutch Bureau for Economic Policy Analysis (CPB). (Incidentally, this is not the first time I’ve come across excellent work by the CPB – their work on administrative burdens imposed by regulation is essentially the international pioneer on the topic and has informed EU thinking on how to cut red tape.)

Rather than hundreds of words of rapier-sharp analysis, I thought I would just post one graph that I thought was the single most shocking thing I’ve seen this recession yet: Japan’s trade figures.

Japan's exports and imports, Jan 2000-Jan 2009

Japan's exports and imports, Jan 2000-Jan 2009

While Japan may have been ‘over-exporting’ – or at least ‘under-importing’ if domestic demand is moribund – the 40% year-on-year collapse in exports cannot be written off as just another statistic. Presumably driven by exports of cars, this has to make for dismal reading. China is not far behind, it seems, with exports down almost 20% year-on-year in late 2008.

As far as I know, even open countries such as Estonia (down 10%), Singapore (down 20%) and Ireland (down just 1%) have seen falls in exports but nothing like 40%. (Interestingly, imports have collapsed in Ireland, down almost 30%, while exports are static – are multinationals just clearing their output?)

For those who think this whole post is just far too optimistic, to REALLY depress yourself, have a look at this global – rather than US – comparison of the 1930s and today, A Tale of Two Depressions, by Kevin O’Rourke and Barry Eichengreen. As they note in their conclusion:

The world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30. The good news, of course, is that the policy response is very different. The question now is whether that policy response will work.

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