Question

Government class: Propose further policy changes about COVID-19 needed to weather the storm, so to speak.

Answer 1

COVID-19 has destroyed supply chains across the globe and made many small and medium scale business inoperable. As a result, there has been widespread unemployment which leads to a decline in income and demand. This exacerbates the negative impact of the crisis on growth. Although, the monetary policy has responded by slashing policy rates close to 0, monetary policy has limited impact as it can not put workers in factory when health is the issue. A major fiscal stimulus is the need of the hour. There should be a provision for a minimum basic income, that is paid monthly or even weekly, such that people have the liquidity to purchase essential goods. There should be a deferral of all mortgage and loan payments and EMIs to give both firms and people more breathing space. The government should invest every penny in the healthcare sector, as in fighting the crisis and the economy time is of utmost importance. The only way to minimize losses is to minimize the time it takes to eradicate the disease. There is also an urgent need for governments in different countries to no act in isolation, but rather provide synchronized stimulus so that the world economy can recover without chaos.