The global policy response to the Coronavirus

Key points:

  • 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.


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