The Economic Policy Response to the Coronavirus?

Considerable attention is focused, and rightly so, on the public health challenges posed by the Covid-19 spread; however, following the sharp collapse of the stock market, analysts are now also beginning to opine on the macroeconomic implications of the pandemic. Recent op-eds speak of the perhaps premature reduction in interest rates initiated by the Federal Reserve in the U. S., while other pundits are speculating as to whether the sharp drop in global GDP will be followed by a V-shaped more rapid recovery or a U-shaped longer one. The main instrument to deal with the consequences of this unforeseen event is fiscal policy and here is where attention should be directed.

Author: Danny Leipziger

Publication Type: Economic Viewpoint

Publication Year: 2020