Further Thoughts on the Economic Implications of Covid-19

It may seem too early to draw economic lessons from the horrendous pandemic that we face, especially since the health aspects are of foremost importance; however, sometimes crises force a clearer picture to emerge and there may be some valuable
insights already apparent from the events of early 2020. As mentioned in Economic Viewpoint #56, the major tool for dealing with a global collapse in demand is fiscal policy. Comments from four former IMF chief economists (reported in the Financial Times on March 16) all point to an almost inevitable global recession with the only variables being its duration and the depth of contraction. In addition to increased health spending to confront the emergency, this points to the need for expansionary fiscal policy on an unprecedented scale, even larger than the 2008-2009 global stimulus plans organized under the umbrella of the G-20.

Author: Danny Leipziger

Publication Type: Economic Viewpoint

Publication Year: 2020