The most-studied economic crises start at one site. The medical shock is striking the economy at multiple sites. By the end of January 2020, every G7 nation had at least one case. The medical shock, as measured by the number of new cases, started in China in late 2019, but it was only a matter of a few days before cases showed up in some G7 nations. Unlike other recent crises, the COVID-19 economic crisis did not start (economically) in one or two nations and then spread to many others. The underlying shock has hit all the G7 nations and China at the same time. But this one is different, and it is different in two main ways. This economic crisis is differentĮconomic crises are like buses there’s always another one coming along. After all, people are the important thing, money is cheap, and this medical shock is transient. Governments should choose quick options that keep the economy’s lights on without worrying too much about costs. ![]() I suggest that policymakers think about the “economic medicine” for the COVID-19 crisis in the same way. After all, goods are cheap, labor is expensive, and Christmas is short. I would tend toward a costly-but-quick option and replace all the bulbs at once. But since bulbs were expensive and labor was cheap back then, the prolonged darkness was worth it. My Depression-era parents taught me to fix it by checking each bulb, one-by-one, all one hundred of them. If one light bulb blew, the whole string went dark. How should we think about containing the COVID-19 economic crisis?Ĭhristmas lights, when I was a kid, were wired in series.
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