The Zombification of the Economy? Assessing the Effectiveness of French Government Support during Covid-19 Lockdown

Arbeitspapier

This paper evaluates the risk of zombification of the French economy during the sanitary crisis, as a result of the unconditional financial support provided to firms by public authorities. We develop a simple theoretical framework based on a partial-equilibrium model to simulate the liquidity and solvency stress faced by a large panel of French firms and assess the impact of government support measures. Simulation results suggest that those policies helped healthy but illiquid firms to withstand the shock caused by the pandemic. Moreover, the analysis finds no evidence of a "zombification effect", as government support has not disproportionately benefited less productive companies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9850

Classification and Topics

• Classification: Wirtschaft ; Crisis Management ; Fiscal Policies and Behavior of Economic Agents: Firm ; Wages, Compensation, and Labor Costs: Public Policy ; Bankruptcy; Liquidation ; Firm Objectives, Organization, and Behavior: General
• Subject: Covid-19 ; zombie firms ; job-retention ; schemes ; microsimulation ; policy evaluation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Guerini, Mattia ; Nesta, Lionel ; Ragot, Xavier ; Schiavo, Stefano
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/263780
• Last update: 10.03.2025, 11:41 AM CET