07.04.2020

"Flattening the curve" and why it also applies to economists

A research seminar on the economic impact of the corona crisis

ESB Professor Anna Goeddeke with some of her students talking about "The economic impact of the corona crisis"

By Katrin Reil

It goes without saying that academics from all disciplines at the ESB Business School are currently occupied with the corona pandemic. Anna Goeddeke, Professor of Industrial Economics, is, at present, offering the research seminar "The economic impact of the corona crisis" as an online seminar in the Bachelor’s programme International Business. In this interview she tells us more about the seminar content, virtual teaching and why "flattening the curve" is now also the most important catchphrase for economists alike.

Ms Goeddeke, how did the idea for a seminar on the corona crisis come about at such short notice?

Every semester in the International Business programme, we offer a voluntary research seminar in which professors present current topics from their field. It was my turn to do so and I actually wanted to talk about the economics of development aid. However, under the current circumstances, it seemed appropriate to switch the theme. For many of our students, this is the first major economic crisis that they are consciously experiencing. It would be a pity not to address this in a business studies degree course.

Can you tell us more about the structure and content of the seminar?

We initially gathered information about students’ previous knowledge on the subject. I was really impressed by how fervently they had been following the business news and how well prepared they were. We then tried to link current events with what they had learned during their studies.

What particular issues came up during the seminar?

The first effects of the corona crisis were a sharp decline in supply ("supply shock") due to quarantines, social distancing and disruptions in global supply chains. On the one hand, there were the famous hoarding purchases of toilet paper, yeast and face masks, i.e. a sharp increase in demand. On the other hand, and simultaneously, other industries such as clothing stores, bars or cinemas were closing down. Spending on larger consumer goods such as cars or smartphones has also been reduced because of the uncertainty about the further course of the pandemic. The same applies to companies. They are unsure of when they can resume normal business and are consequently reducing their investments- in extreme cases, running into serious financial difficulties and having to file for administration, which in turn affects employees and their buying behaviour. There follows a downward spiral, economic output declines and we end up in a recession.

So is it all bad news?

The crucial question that nobody can answer at the moment is how long the crisis will last. If we can return to "normal" relatively quickly, there is hope that the economy will also recover quickly. In contrast to natural disasters, no material assets, such as property, are being destroyed that first have to be rebuilt. In principle, people could start to return to their old consumption habits almost immediately.

The longer the crisis lasts, the more companies are likely to go into administration and the more people are likely to lose their fixed income, the worse the recession will be. Economists are indeed talking about "flattening the curve," but we need to flatten the recession curve.

From an economic point of view, what interests students most about the corona crisis?

So far, we have discussed how things have developed up to this point and how they will probably continue. For the upcoming seminars, students have expressed interest in various topics: What can the state do to keep the recession curve flat? Is an unconditional basic income a good idea? Do so-called coronabonds help? Who is going to pay off the government debt we are currently creating? What are the economic effects, especially on developing countries? Another idea is to look back to similar historical epidemics, at the economic impact of the Spanish flu and the research that has been done on it.

Aside from these issues, many students are naturally concerned about what effects the corona crisis or economic recession will have on their own professional future.

With reference to the quality of teaching, the seminar takes place online. How does this work?

Of course it is not easy to create a "seminar-like" classroom setting if you are not sitting together in one room. Fortunately, there is the possibility to broadcast the seminar via video stream, even though this is of course not the same as face-to-face teaching. Teaching material such as newspaper articles, podcasts or other publications are available in advance. This gives the students a basis to work from and allows them to participate directly in the discussion.

What has the feedback been like on the changeover to online teaching?

Overall, the response is very good. Many students are relieved that the semester was able to continue at all. I also think we can be very proud of how much we have achieved in the past weeks. From one day to the next we were able to switch our teaching to online formats. The students have also seen the hard work behind the transition and are very tolerant if something doesn't work out as planned. For the moment, we can adjust to and live with online teaching, but both students and teachers are certainly looking forward to returning to face-to face teaching at some point.