‘Act fast and do whatever it takes’ to fight the COVID-19 crisis, say leading economists

covid spain

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Rosamond Hutt, Senior Writer, Formative Content


  • Leading economists urge governments to bring out the ‘big artillery’ to fight the economic fallout caused by the COVID-19 pandemic.
  • Unconventional policy options such as ‘helicopter money’ should be on the table, they argue.
  • Governments will need to reduce personal and corporate bankruptcies, ensure people have money to keep spending even if they’re not working, and increase public investment and healthcare spending, the economists say.

As the list of countries shutting down in the face of the coronavirus pandemic continues to grow, leading economists from around the world are calling for radical action to fight the economic fallout.

 

More than 40 high-profile economists, including IMF Chief Economist Gita Gopinath and former President Barack Obama’s top economic adviser, Jason Furman, have contributed to an eBook from the Centre for Economic Policy Research (CEPR) in which they urge governments to act quickly and do whatever it takes to keep the lights on.

They advocate using heavy fiscal firepower for a “whatever-it-takes” economic response to the COVID-19 crisis.

Among the drastic measures proposed are: ‘helicopter money,’ where everyone gets a no-strings-attached handout; Eurozone countries using eurobonds to issue debt together rather than individually; and state investment banks providing unlimited emergency lending to firms.

Flattening two curves

Economics coronavirus
Containment measures flatten the infection curve, but steepen the recession curve.
Image: Centre for Economic Policy Research (CEPR)

Though the economists say it’s still too early to tell how bad the economic damage will be, they’re certain it will be large – the pandemic is destroying lives and livelihoods around the world.

The measures necessary to contain the virus – quarantine, social distancing, school, university and daycare closures, shutdowns of non-essential businesses, and asking people to work from home – are bringing economies to a screeching halt.

What is the World Economic Forum doing about the coronavirus outbreak?

A new strain of Coronavirus, COVID 19, is spreading around the world, causing deaths and major disruption to the global economy.

Responding to this crisis requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.

The Forum has created the COVID Action Platform, a global platform to convene the business community for collective action, protect people’s livelihoods and facilitate business continuity, and mobilize support for the COVID-19 response. The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.

As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.

“We are facing a joint health and economic crisis of unprecedented proportions in recent history,” writes Pierre-Olivier Gourinchas of the University of California, Berkeley, in a chapter on how to flatten both the infection and recession curves.

But there are fiscal policies governments can use to prevent or limit catastrophic collapses, which Gourinchas says are like the “intensive care units, beds and ventilators of the economic system.” For example, central banks can provide emergency liquidity to the financial sector.

Reducing economic scar tissue

Economics coronavirus
Governments need to address all the red crosses in this diagram.
Image: Centre for Economic Policy Research (CEPR)

To avoid deep, long-lasting damage to economies, governments will need to reduce the number of personal and corporate bankruptcies, ensure people have money to keep spending even if they’re not working, and increase public investment and healthcare spending, the authors write.

Put another way, they need to act now to “reduce the accumulation of economic scar tissue”.

“This is the time to bring out the big artillery; this is not a time to be timid, but to do whatever it takes, fast,” they write.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

COVID-19: This is what worries young people the most

5G will drive Industry 4.0 in the Middle East and Africa

Is Eurozone heading towards a long stagnation?

A new catastrophic phase in the Syrian carnage

MEPs call for binding 2030 targets for materials use and consumption footprint

FROM THE FIELD: Rohingya babies conceived out of ‘incomprehensible brutality’

How privacy tech is redefining the data economy

Why home is the least safe place to be a woman

Does the EU want GMOs and meat with hormones from the US?

Property regimes for international couples in Europe: new rules apply in 18 Member States as of today

State aid: Commission approves €500 million Greek scheme to support food service companies affected by coronavirus outbreak

Diversity training doesn’t change people’s behaviour. We need to find out what does

How India can become a leader in sustainable aviation fuel

David McAllister underlines the need for rapid progress in EU-UK negotiations

Decades of progress ‘can be wiped out overnight,’ UN chief laments at climate session in Yokohama

Women in video games: ‘Accept it, or don’t buy the game’

Financing economic recovery, written by United Nations Under-Secretary-General

Why Eurozone can afford spending for growth

Pakistan has just planted over a billion trees

Don’t dismiss start-ups founded by millennials. This is how they succeed

How India’s government can build better contracts with blockchain

World leaders must put women at centre of COVID-19 recovery

EU-Vietnam: Council adopts decisions to sign trade and investment agreements

EU-wide rules for safety of drones approved by European Parliament

EU approves €100 million for the post-earthquake reconstruction in Albania

EU job-search aid worth €2 million for 500 former shipbuilding workers in Spain

New energy security framework will help meet growing needs in East Africa, sustainably – UN economic wing

14 ways to protect your mental health in the pandemic, according to Public Health England

The EU invites the US and Russia to partition Ukraine

Commission calls on Leaders to pave the way for an agreement on a modern, balanced and fair EU budget for the future

Legendary Harlem Globetrotters slam-dunk at the UN, with message that brings families, nations together

This is what’s happening to the Amazon, according to NASA

United States: UN chief ‘deeply saddened’ by deadly California wildfires

What’s behind South Korea’s elderly crime wave?

Mental health: fighting the hidden pandemic

10 ways American workers view their future economic opportunities

Understanding of LGBT realities ‘non-existent’ in most countries, says UN expert

What kind of action on social justice should we expect from companies in the future?

Lack of access to clean water, toilets puts children’s education at risk, says UN

These are the world’s best universities

COVID-19 sparked an economic crisis ‘like no other’ – but these measures can help now: WHO, IMF

Brussels waits for the Germans to arrive

From rescue animals to electric buses, California is introducing bold new rules

Over 1 million health consultations provided in Yemen in 2019: UN migration agency

This ceramic ink can 3D-print bones directly into a patient’s body. Here’s how

May led Britain to chaos, now looks for way out with unpredictable DUP

Paris agreed with Berlin over a loose and ineffective banking union

Coronavirus: EU grants €314 million to innovative companies to combat the virus and support recovery

99 per cent of intravenous drug users lack access to health, ‘social services with dignity’ says UNAIDS chief

Commission to invest €14.7 billion from Horizon Europe for a healthier, greener and more digital Europe

The invisible L word: the struggles to achieve SRHR, as HIV/AIDS prevention and treatment for lesbian population

A European young student speaks about the Youth Policies of the European Commission

How unity and common purpose can help us defeat this virus

Lessons learnt from the Commission’s 2020 rule of law report

This surprising change can help the auto industry tackle emissions goals

Eastern Partnership: a renewed agenda for recovery, resilience and reform underpinned by an Economic and Investment plan

India is failing 175 million of its young people. Here’s the solution

Impact investing in Latin America and addressing the ‘missing middle’

Parallel downfalls of Merkel and Deutsche Bank threaten Germany and Europe

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s