COBOLing together UI benefits: How delays in fiscal stabilizers affect aggregate consumption
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The COVID-19 pandemic caused a severe contraction in U.S. economic activity; federal government spent over $5 trillion on subsidies, transfers, grants, and tax cuts; administrative capacity issues hindered policy response; massive spike in unemployment insurance (UI) claims led to delays in benefit disbursement; 22 states had modernized their UI systems by 2020, abandoning COBOL; consumption fell more in states using COBOL, with a 2.8-percentage-point larger decline from March 13, 2020 to December 31, 2020; failure to modernize UI systems resulted in at least $105 billion lower real GDP; delays in UI benefits reduced consumption due to lower marginal propensity to consume; study conducted by Michael Navarrete, published on September 9, 2024.

#Covid19 #UnemploymentInsurance #EconomicPolicy #FiscalStabilizers #Cobol #Consumption #Gdp #LaborMarket #EconomicRecovery #PolicyAnalysis

https://www.brookings.edu/articles/coboling-together-ui-benefits/