This week’s IGM European Economic Experts Panel statements:
Government support to private firms in the form of debt (either directly or with the help of public guarantees) is desirable, but risks leaving them with too much leverage to invest and grow in the future.
Providing funds to viable businesses in the form of equity injections is a vital complement to debt support.
With the EU ban on state aid suspended, government capital injections should be provided via a newly created pan-European equity fund, rather than be left to national governments acting independently.
Keyword: Coronavirus
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This week’s IGM Economic Experts Panel statements:
The balance of federal and local government support to address the economic impact of the crisis has thus far been tilted too much towards supporting firms rather than individuals.
Government provision of financial support to firms to keep workers on payroll for the duration of the lockdown will make the recovery faster than if the only recourse for workers to replace income were unemployment insurance.
This week’s IGM European Economic Experts Panel statements:
A) Even with the support policies implemented by European governments in response to the crisis, low-income workers will suffer a relatively bigger hit to their incomes than those further up the distribution.
B) With schools across Europe closed in the lockdown, existing gaps in access to quality education between high- and low-income households will be exacerbated.
C) Combating the effects of the pandemic on inequality should be a priority for policy interventions.
This week’s IGM Economic Experts Panel statements:
A) With the economy in lockdown, low-income workers who are above the poverty line will suffer a relatively bigger hit to their incomes than those further up the distribution (even accounting for all government support schemes).
B) With the economy in lockdown, existing gaps in access to quality education between high- and low-income households will be exacerbated.
C) The mortality impact of Covid-19 is likely to fall disproportionately on disadvantaged socio-economic groups.
This week’s IGM Economic Experts Panel statements:
A) Even if tests for Covid-19 are being rationed, there is an urgent need for some random testing to establish baseline levels of the virus to inform any decisions about ending lockdowns.
B) Required elements for an economic ‘restart’ after lockdowns include a massive increase in testing capacity (for infections and antibodies) along with a coherent strategy for preventing new outbreaks and reintroducing low-risk/no-risk individuals into public activities.
This week’s IGM European Economic Experts Panel statements:
A) Severe lockdowns – including closing non-essential businesses and strict limitations on people’s movement – are likely to be better for the economy in the medium term than less aggressive measures.
B) While national governments have responded to the crisis with substantial economic policy measures, a joint euro area fiscal response is still highly desirable.
C) Given the willingness of the European Central Bank to buy sovereign bonds, including Italian bonds, without limits, there is no need for ‘coronabonds’.
This week’s IGM Economic Experts Panel statements:
A) A comprehensive policy response to the coronavirus will involve tolerating a very large contraction in economic activity until the spread of infections has dropped significantly.
B) Abandoning severe lockdowns at a time when the likelihood of a resurgence in infections remains high will lead to greater total economic damage than sustaining the lockdowns to eliminate the resurgence risk.
C) Optimally, the government would invest more than it is currently doing in expanding treatment capacity through steps such as building temporary hospitals, accelerating testing, making more masks and ventilators, and providing financial incentives for the production of a successful vaccine.
This week’s IGM Economic Experts Panel statements:
A) Even if the mortality of COVID-19 proves to be limited (similar to the number of flu deaths in a regular season), it is likely to cause a major recession.
B) The economic effects of COVID-19 coming from reduced spending will be larger than those coming from disruptions to supply chains and illness-related workforce reductions.
This week’s IGM European Economic Experts Panel statements:
A) Even if the mortality of COVID-19 proves to be limited (similar to the number of flu deaths in a regular season), it is likely to cause a major recession.
B) The economic effects of COVID-19 coming from reduced spending will be larger than those coming from disruptions to supply chains and illness-related workforce reductions.
C) The economic policy institutions of the Eurozone are well equipped to ameliorate the potential economic damage from COVID-19.
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