Publications
•Some of the shifts in occupational demand due to COVID-19 are consistent with the secular and episodic aspects of routine-biased technological change leading to job polarisation.•Other occupational demand shifts are rather explained by idiosyncratic features of the COVID-19 shock (e.g. health emergency) and responses to it (e.g. social distancing, lockdown).•The identified effects were highly persistent and increasing in size during COVID-19.•Complementarity between cognitive analytical and interactive tasks increased due to COVID-19 especially, the first pandemic wave of 2020. Using monthly online job postings data at the occupation-US-state level in January–December 2020, we provide novel evidence on how COVID-induced economic uncertainty has impacted the occupational composition of US labour demand. The effects are identified by exploiting monthly variation in country-level uncertainty along with pre-COVID differences in shares of occupation-state pairs in occupational country-wide employment and occupational task content. Some of the effects are consistent with the secular and episodic aspects of routine-biased technological change (RBTC) leading to job polarisation and growing complementarity between cognitive analytical and interactive tasks. Interestingly, however, other effects are seemingly at odds with RBTC-induced job polarisation and rather rationalised by idiosyncratic features of the shock (e.g. health emergency) and responses to it (e.g. social distancing, lockdowns). Although additional evidence points to high persistence of most of these effects in 2020, further research in this direction would shed light on whether the effects will persist through the post-COVID era or phase out.
•We study the role of government debt maturity in currency unions.•Can debt management help to hedge their budgets against spending shocks?•Empirically government portfolios have been effective in absorbing aggregate but not idiosyncratic fiscal risks.•Theoretically nominal bonds are not optimal to insure against idiosyncratic fiscal shocks in a currency area.•In contrast, long term inflation indexed debt allows governments to take full advantage of hedging. We study the role of government debt maturity in currency unions to identify whether debt management can help governments to hedge their budgets against spending shocks. We first use a detailed dataset of debt portfolios of five Euro Area countries to run a battery of VARs, estimating the responses of holding period returns to fiscal shocks. We find that government portfolios, which in our sample comprise mainly of nominal assets, have not been effective in absorbing idiosyncratic fiscal risks, whereas they have been very effective in absorbing aggregate risks. We then setup a formal model of optimal debt management with two countries, distortionary taxes and aggregate and idiosyncratic shocks. The theoretical model concludes that nominal bonds are not optimal to insure against idiosyncratic fiscal shocks in a currency area. In contrast, we find that long term inflation indexed debt allows governments to take full advantage of fiscal hedging.