The global policy response to the Coronavirus
The global fiscal and monetary response to the coronavirus has been mammoth. Global fiscal stimulus is worth over 3% of GDP, interest rates have been slashed to the lower bound, quantitative easing programs have been launched and central banks are providing cheap lending facilities.
The latest US stimulus program provides broad support to the economy and injects a fiscal impulse worth 6% of GDP. NB: Fiscal stimulus won’t be enough to keep the economy from falling into a recession because of the loss of output from lockdowns.
But fiscal stimulus is necessary to keep the unemployment rate from rising too far and will supercharge the eventual recovery in the economy.