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When The Contagion Effect Went Live: The First Responses To The Covid-19 Pandemic

Author

Listed:
  • Esposito, Lorenzo

    (Bank of Italy, Milan Branch and Economic Policy Department, Università Cattolica del Sacro Cuore, Milan, Italy)

  • Mastromatteo, Giuseppe

    (Economic Policy Department, Università Cattolica del Sacro Cuore, Milan, Italy)

Abstract
The CoViD-19 pandemic has changed world history and sparked a huge debate among social scientists. In this work, we concentrate on the initial (two months of) institutional responses to the pandemic in the advanced economies, by analyzing the discussions in the press and in the scientific literature. These first analyses of the pandemic represent the “instinctive” and “automatic” responses of the economic profession, on one side, and policymakers on the other, to the emergency, which allows for an interesting overview of the progression of events. We will deal with the international and domestic measures aimed at countervailing the collapse of income and production, the new role of governments and central banks in the economy, and how the adopted anti-shock measures have already forced some countries to shift their institutional economic policy framework. This is especially relevant for the European Union, since the Stability and Growth Pact can be seen as one of the first ‘victims’ of the virus, as well as possibly its financial system, which has also succumbed to a contagion effect. Finally, we will discuss if and how economic theory will be able to come forth with new ideas and provide novel and viable solutions. E l'effetto contagio divenne reale: le prime risposte alla pandemia Covid-19 La pandemia di Covid-19 ha cambiato la storia mondiale e ha acceso un enorme dibattito tra gli scienziati sociali. In questo lavoro ci concentriamo sulle risposte istituzionali immediate (i primi due mesi) alla pandemia, analizzando il dibattito in corso sulla stampa e sulla letteratura scientifica sul tema. Essendo le prime analisi della pandemia, rappresentano la risposta “istintiva” e “automatica” che la professione economica da una parte, e i policymakers dall'altra, hanno dato alla questione, consentendo un interessante punto di vista sulla progressione degli eventi. Ci occuperemo delle misure volte a contrastare il crollo del reddito e della produzione, del nuovo ruolo dello Stato nell'economia che ne è seguita e di come le misure anti-shock abbiano già imposto un cambiamento nel quadro istituzionale della politica economica. Ciò è particolarmente interessante per l'Europa, dove il Patto di stabilità e Crescita è stata una delle prime vittime del virus, e per la situazione del sistema finanziario, che ha dovuto fare i conti con un vero effetto contagio. Infine, discuteremo se e come la teoria economica sarà in grado di proporre nuove idee per rispondere alla situazione.

Suggested Citation

  • Esposito, Lorenzo & Mastromatteo, Giuseppe, 2020. "When The Contagion Effect Went Live: The First Responses To The Covid-19 Pandemic," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(4), pages 467-496.
    • Handle: RePEc:ris:ecoint:0882
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    References listed on IDEAS

    as
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    3. Veronica Guerrieri & Guido Lorenzoni & Ludwig Straub & Iván Werning, 2022. "Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages?," American Economic Review, American Economic Association, vol. 112(5), pages 1437-1474, May.
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    More about this item

    Keywords

    Pandemic; Crisis; Financial Stability; Economic Policy;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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