Tyrone Burke, July 6, 2020
Carleton University Rapid Response Grants: Business, Economics and Modelling
The COVID-19 pandemic has created new challenges and emphasized the urgency of grappling with social issues like inequality. The complexity of this crisis demands the mobilization of experts in many disciplines, and the academic community has answered the call. In April 2020, Carleton launched the Rapid Response Research Grants program to help build our understanding of COVID-19 and the ways in which the pandemic is impacting our lives. This funding initiative is providing $250,000 to 59 research projects being undertaken by researchers from all five of Carleton’s line faculties: Arts and Social Sciences, Engineering and Design, Public Affairs, Science, and the Sprott School of Business. This is the first of five stories covering these projects.
COVID-19 Research: Business, Economics and Modelling
In the decades leading up to the COVID-19 pandemic, globalization was virtually economic gospel. National economies grew ever more integrated, and in just twenty years, the total value of international trade tripled. Companies sought savings in developing countries where costs were lower — and those countries competed to attract their investments. Supply chains grew more complex, and the global economy achieved a greater level of integration than ever before.
Then, quite suddenly, it stopped. Factories were shut, and borders closed to non-essential travel. Shop fronts were shuttered, and billions of consumers were told to shelter in place. Tens of millions of workers were thrown out of work, almost overnight. A global pandemic presents an unprecedented challenge to a global economy, and as we recover from the economic shock, there is much to rethink about the way we do business.
Among the challenges of modelling the pandemic’s impact on the economy are the many unknown qualities of the virus itself. Our knowledge of how it spreads has evolved over the first months of the pandemic.
Dr. Yiqiang Zhao of the School of Mathematics and Statistics is developing a machine learning-driven statistical model that analyzes the stream of data related to COVID-19. Key to Zhao’s model is a dynamic approach to parameters that enables the tool to be updated and modified as we learn more about the virus.
Canada’s border with the United States has long been a paragon of openness, but to contain the virus, it will be necessary to exert greater control over the movement of symptomatic people. Dr. Chris Joslin of the School of Information Technology will be exploring how to monitor key health indicators at points of entry to Canada, identifying infected people at border crossings and ensuring that they quarantine, without needing to shut down international trade and tourism routes entirely.
When trade and tourism routes atrophy, small and medium sized businesses that supply global corporations are among those hit the hardest. Dr. Diane Isabelle of the Sprott School of Business is exploring how artificial intelligence-based modelling could help these businesses identify what makes small and medium sized businesses successful in the post-coronavirus economy. Isabelle will be looking at the type of business models that are proving successful in this new business environment, and what role digitalization can play in an effective recovery.
It is still unclear which businesses will be most successful in the next phase of the pandemic, but its first months have had an undeniable impact on consumer priorities. Driven by fear of looming shortages, consumers stockpiled goods during the early days of lockdown. And while there was no looming shortage of toilet paper, the coronavirus has impacted the supply chain, most notably in large-scale meat processing plants, which have experienced thousands of infections. Dr. Irena Knezevic of the School of Journalism and Communications is examining the pandemic food purchasing and consumption behaviour of Ontario consumers, with an eye cast toward developing more resilient local food production systems.
Fear of the virus could also be impacting consumer attitudes to sustainable products. Dr. Irene Lu and Dr. Ernest Kwan of the Sprott School of Business are examining public perception of four types of sustainable products – and what marketing strategies could help assuage the fear of contagion.
Retailers themselves are also vulnerable. Lockdowns closed down shops entirely, and they are reopening to new rules. Crowded, and enclosed spaces with restricted airflow can increase the risk of coronavirus transmission. To make the process safer, Dr. Zachary Colbert is developing adaptive architectural design standards and recommendations on how to accommodate physical distancing measures in retail environments. The research by the Assistant Professor in the Azrieli School of Architecture and Urbanism will help stores safely reopen – and give consumers confidence that they can be safe while they shop.
Getting Canadians back to work is a priority, and some sectors have been hit much harder than others. When the pandemic hit, thousands of events were cancelled – from small, intimate concerts to major sporting events. Even some parts of the economy begin to emerge, it still isn’t clear when major events will return. Dr. Babak Esfandiari of the School of Systems and Computer Engineering is working to develop anonymous contact tracing that could be used at large events to help prevent the spread of the virus, and inform those who could have been exposed.
Not every aspect of the economic shutdown has been negative. Dr. Paul Villeneuve of the School of Mathematics and Statistics is studying its impacts on harmful emissions. When the economy closed down, many of us began working from home, which reduced traffic and emissions. Factories and many other sources of industrial pollution also closed. Suddenly, smoggy Los Angeles had some of the world’s cleanest urban air, and heavily polluted cities like Delhi and Beijing saw skies unobstructed by pollution for the first time in years. But it is not yet clear how much of an impact the shutdown has had on pollution in Canada. Villeneuve is collecting data on concentrations of fine particulate matter from a series of Canadian monitoring stations, with the hope of identifying whether there has been a reduction of this type of pollutants, which is estimated to cause 10,000 deaths per year in Canada. This study complements Villeneuve’s work investigating how COVID-19 physical distancing restrictions and curfews have impacted air quality in Grenada.
But our economy isn’t only about the manufacture and sale of physical goods. During the pandemic, many office workers have worked from home. Workers who previously lacked either the desire or opportunity to work from home found themselves taking a crash course in Slack, Microsoft Teams, and Zoom. Dr. Linda Schweitzer of the Sprott School of Business is studying workers’ adjustment to this new remote working environment — and what it could mean for the future of work.
For many blue-collar workers, their workplace concerns are more immediate. Millions of essential workers have had to work in environments where they risk exposure to the coronavirus. Millions more lost their jobs outright. Dr. Louis-Philippe Béland of the Department of Economics is analyzing the Canadian Labour Force Survey and the U.S. Current Population Survey to understand what the economic consequences have been, considering regional disparities in COVID-19 infections, occupation, demographics, and immigration status.
During the pandemic, Canadians need charitable organizations to provide critical services. Unfortunately, the pandemic also impacts these organizations. Some may need to substantially change service delivery, or could struggle to generate revenue. Dr. Nathan Grasse and Dr. Susan Phillips of the School of Public Policy & Administration are researching the vulnerability and resilience of Canadian charities, seeking to understand the challenges that they are facing, and how they are adapting in the face of crisis.
For central bankers, the crisis presented a challenge on an entirely different scale. Their macroeconomic models were not designed to integrate epidemiological data. As the federal government wrestled with major decisions about emergency benefits, and the Bank of Canada bought up provincial bonds, they would have been using models that treat epidemiology and economics as distinct entities, when they had become inextricably intertwined.
Dr. Hashmat Khan of the Department of Economics is working to bridge this gap by integrating a widely used form of epidemiological modelling called Susceptible-Exposed-Infectious-Recovered (SEIR) with a macroeconomic model. His team will be seeking to integrate data on age-specific social distancing in to a multi-sector economic model, in order to better understand how public health interventions impact the economy.
Individual investors and investment bankers also found themselves in unfamiliar terrain in 2020. In early February, the Dow Jones Industrial Average hit an all-time high. Just over a week later, markets crashed as investors began to realize that the COVID-19 pandemic would not be contained within China. Dr. Mohamed Al Guindy of the Sprott School of Business is researching how the severity of the looming crisis diffused within social networks of investors, and how they reacted when they learned about it. His hope is to inform economic policy and learn about various pathways for recovery; as well as to understand the impact of fear in financial social networks more broadly.
For policy makers of all stripes, the complexity of the situation presents an enormous challenge. Every aspect of the economy is impacted by multiple other aspects of the economy. This is compounded by our ever-evolving knowledge of COVID-19, which only adds to the uncertainty. Dr. Stephen Saideman and Dr. Stephanie Carvin of the Norman Paterson School of International Affairs are seeking to build a better understanding of how the pandemic is affecting Canada’s defence capabilities at home and abroad. They’ve hosted a virtual workshop with academics across the country, and are conducting research into areas identified as important by Canada’s Department of National Defence – including the pandemic’s international and budgetary implications, its impact on Canadian communities, and how it could affect the Canadian Armed Forces moving forward.
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