The COVID-19 Crisis and the Allocation of Capital

Ran Duchin and Jarrad Harford

We summarize and synthesize the results of the papers in this symposium issue on research related to the COVID-19 Pandemic. We argue that, taken together, the papers present evidence that the pandemic resulted in a shock to capital allocation. The reasons include accelerating technological shifts that disrupted financial and real economic activities, thus affecting both the supply of capital and reshuffling the demand for capital across sectors and businesses, as well as unprecedent stimulus packages that allocated capital to individuals, firms, and local governments through a myriad of programs and program designs. We present additional evidence on the heterogeneous cross-industry impacts on profit, payout, investment, employment and productivity.