Liquidity Shortfalls during the COVID-19 Outbreak: Assessment and Policy Responses

We study the impact of the health crisis on the activity of more than 645,000 French companies using individual data to estimate their monthly turnover. Our microsimulation model is innovative in three ways. First, we quantify the loss of activity with respect to a non-crisis counterfactual situation to take into into account companies' growth trajectories before the pandemic when discussing the consequences of the crisis. Second, we estimate this shock at the individual level to study the heterogeneity of loss of business. We highlight the disparities of the shock both between and within sectors. The sector explains up to 48% of the variance of the monthly activity shocks observed in 2020, a much larger proportion than in a normal year. Finally, we identify four profiles of activity trajectories in 2020. The industry is the primary determinant of belonging to these profiles. Conditionally to the sector, these profiles are also correlated with the organisational adaptation of companies.