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Published on Friday, May 22, 2020

The US and Europe: Economic Policies in the Face of the Crisis

The economic crisis that has accompanied the COVID-19 is markedly different from others that have come before. This has made it difficult to make forecasts, with at least three sources of uncertainty: how much activity is falling, how will economic agents react and how efficient will economic policies be implemented.

Key points

  • Key points:
  • Generally speaking in advanced economies, economic policies have emerged quicker this time than they did during the crisis in 2008 and subsequent years, though they are probably less coordinated this time around.
  • Both the Fed and the ECB have been quick in implementing instruments to provide almost unlimited liquidity to financial markets and hence reduce financial tensions.
  • As for fiscal policy, the reaction has been massive both in the United States and in Europe. This does not come as a surprise in the United States, but it does in Europe.

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