Thiemo Fetzer Discussion of: COVID and Income Inequality

The COVID-19 pandemic led to an unprecedented economic policy response across much of the world. A broad range of conventional and unconventional economic policy instruments were deployed and the research community will spend the next years parsing through the wealth of research questions that can be studied through the data generated by these policy interventions. The present paper is a nice illustration of the type of research that can be carried out in a real-time fashion. It is the first and foremost a cleanly executed descriptive analysis leveraging confidential micro data from one of Spain’s largest banks. Motivated by concerns about COVID-19’s impact on inequality, it suggests that the significant expansion of government transfers mostly offset income losses that arose due to the public health crisis.