The Double Effect of COVID-19 Confinement Measures and Economic Recession on High-Risk Drug Users and Drug Services.

The ongoing COVID-19 pandemic is likely to have a profound impact on the lives of high-risk drug users and on the services responding to their needs in at least two important ways: first, through the restrictive measures introduced to mitigate the spread of the virus and, second, as a result of extensive economic downturn. Currently there is great uncertainty as to the future intensity and duration of the pandemic. In addition, the lessons we have been able to learn from previous economic downturns may be of limited applicability to the current situation, which differs in a number of significant respects. Experience nevertheless suggests that the potential consequences for drug users' health and well-being may be severe. The ongoing uncertainty serves to underline the importance of close monitoring of the drug situation and preparing flexible and innovative solutions to be able to meet new challenges which may arise.

The Need for Monetary Financing of Corona Budget Deficits.

Sooner or later, the ECB must accept that monetary financing in support of deficit spending is a necessity not just for mitigating the coronavirus crisis, but also for averting a downward deflationary cycle that could pull the eurozone apart.

Unemployment and drug treatment.

BACKGROUND: Since 2007 the economic recession has hit most industrial countries and this raises the question of how economic hardship affects illicit drug users' decisions to enter drug treatment. METHODS: We test the hypothesis that an improvement in the employment prospects, as measured by a decline in unemployment, strengthens the intrinsic motivation of an unemployed drug user to enter treatment. Our hypothesis is that the "payoff" of entering treatment increases when the unemployed drug user has a greater probability of finding a job. We reviewed the literature and found considerable evidence to substantiate this effect. We tested the hypothesis econometrically using two different data sets, one EU-wide and one German data set. RESULTS: Our main findings were that unemployment has a significant negative effect on the number of drug users entering treatment, i.e. when unemployment declines (increases) the number of drug treatment clients increases (declines). We also found that unemployed drug users entering treatment are most sensitive to variations in the economy-wide unemployment rate. Employed drug users, in contrast, are not influenced by these variations when deciding to enter treatment. CONCLUSION: Our empirical results confirm that the creation of job prospects adds significantly to the willingness of unemployed drug users to enter treatment. This lends support to the idea that drug treatment should be embedded in programmes to improve the job prospects of drug users.

Globalization and the price decline of illicit drugs.

BACKGROUND: This study aims at understanding the mechanisms underlying the dramatic decline of the retail prices of major drugs like cocaine and heroin during the past two decades. It also aims at analysing the implications of this decline for drug policies. METHODS: We use a theoretical model to identify the possible causes of this price decline. This allows us to formulate the hypothesis that the major driving force behind the price decline is a reduction of the intermediation margin (the difference between the retail and producer prices). We also develop the hypothesis that globalization has been an important factor behind the decline of the intermediation margin. We then analyse the statistical information to test these hypotheses. RESULTS: We find that the decline in the retail prices of drugs is related to the strong decline in the intermediation margin in the drug business, and that globalization is the main driving force behind this phenomenon. Globalization has done so by increasing the efficiency of the distribution of drugs, by reducing the risk premium involved in dealing with drugs, and by increasing the degree of competition in the drug markets. CONCLUSION: We conclude that the cocaine and heroin price declines were due to a sharp fall in the intermediation margin, which was probably influenced by globalization. This phenomenon might have a strong impact on the effectiveness of drug policies, increasing the relative effectiveness of policies aiming at reducing the demand of drugs.

The cocaine and heroin markets in the era of globalisation and drug reduction policies.

BACKGROUND: Despite the large volume of public effort devoted to restrain drug supply and the growing attention given to drug demand reduction policies, the use of cocaine and heroin remains steady. Furthermore, retail drug prices have fallen significantly in Europe and the US. This puzzling evidence leads us to develop a model aiming at systematically analysing illicit drug markets. METHODS: We model the markets of cocaine and heroin from production to the final retail markets. One novelty of the analysis consists in characterising the retail market as a monopolistic competitive one. Then, upper level dealers have some market power in the retail market. This allows them to charge a markup and to earn extra profits. These extra profits attract newcomers so that profits tend to fall over time. RESULTS: Theoretical model was used to analyse the effect of supply containment policies on the retail market, the producer market and the export-import business. This introduces the discussion of the impact of demand reduction policies on the high level traffickers' profit. Finally, globalisation enters in the model. CONCLUSIONS: Law enforcement measures increase the risk premia received by the lower and higher level traffickers. Consequently, trafficking intermediation margins tend to increase. However, globalisation has the opposite effect. It lowers intermediation margins and, then, pushes retail prices down, thereby stimulating consumption. In doing so, globalisation offsets the effects of supply containment policies. Finally, we discuss how the effectiveness of supply containment policies can be enhanced by combining them with demand reduction policies.