COVID-19: guaranteed Loans and Zombie Firms.

ABSTRACT: Based on a survey (7-13 April 2020) we evaluate the reaction of Swiss firms towards the COVID-19 crisis. Firms show little pro-active reactions towards the crisis, but decrease their business activities. The firms in the survey report that the decline in foreign demand is the single most important reason for their deteriorating business situation. Firms that faced a more difficult business situation before the crisis are affected more severely during the crisis. Moreover, we investigate the impact of the Swiss federal loan program (Bundeshilfe) on the business activities. To this end, we develop a stylized theoretical model of financially constrained heterogeneous firms. We find that policy makers face a trade-off between immediate higher unemployment rates and long-term higher public spen

SUBMITTER: Zoller-Rydzek B 

PROVIDER: S-EPMC7799295 | biostudies-literature | 2020 Dec

REPOSITORIES: biostudies-literature