COVID-19, asset prices, and the Great Reallocation

Publication: Popular science articles (i.e. magazines)Popular science article


Whether COVID-19 will trigger a massive reallocation of capital and labour is a key question for policymakers and investors alike. This column shows that asset markets reveal large cross-sectional differences in the repricing of industries before, during, and after the onset of COVID-19. Firms that are more resilient to social distancing significantly outperformed in the six years before and during the COVID-19 outbreak. Looking into the future, stock options imply that investors require significantly lower returns from more pandemic-resilient firms. Governments would be unwise to ignore these signals, directing public financial resources mainly to prop up ailing low-resilience firms.
Original languageEnglish
Specialist publicationVoxEU
Publication statusPublished - 11 Jun 2020

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502009 Corporate finance

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