Abstract
This paper highlights some peculiar characteristics of the economic crisis induced by the spread of COVID-19. It suggests two intertwined policy measures in order to tackle the emergency phase of the crisis and to support the economy in the subsequent recovery phase. The proposed short-term policy measures offer policy responses in the event of a second wave of coronavirus infections in the coming months. In the aftermath of the emergency phase, the current proposal puts forward the implementation of a massive EU-wide recovery plan addressing the long-lasting technological and environmental challenges of these years, which will be financed by European institutions through the issuance of European Pandemic Recovery Bonds.
Footnotes
Alberto Botta, University of Greenwich, UK.
Eugenio Caverzasi, Università degli Studi dell’Insubria, Varese, Italy.
Alberto Russo, Universitat Jaume I, Castellòn de la Plana, Spain; and Università Politecnica delle Marche, Ancona, Italy.
Contributor Information
Alberto Botta, Email: A.Botta@Greenwich.ac.uk.
Eugenio Caverzasi, Email: eugenio.caverzasi@uninsubria.it.
Alberto Russo, Email: russo@uji.es.
References
- Bénassy-Quéré, A., A. Boot, A. Fatás, M. Fratzscher, C. Fuest, F. Giavazzi, R. Marimon, P. Martin, J. Pisani-Ferry, L. Reichlin, D. Schoenmaker, P. Teles and B. Weder di Mauro (2020, 21 March), A proposal for Covid Credit Line, VOX CEPR Policy Portal, https://voxeu.org/article/proposal-covid-credit-line (7 April 2020).
- Blanchard, O. (2020, 24 April), Is there deflation or inflation in our future?, VOX CEPR Policy Portal, https://voxeu.org/article/there-deflation-or-inflation-our-future (4 May 2020).
- Botta A., E. Caverzasi, A. Russo, M. Gallegati, J. E. Stiglitz (2019), Inequality and finance in a rent economy, Journal of Economic Behavior and Organization.
- Codogno, L. and P. van den Noord (2020, 25 March), Covid-19: A euro area safe asset and fiscal capacity are needed now, VOX CEPR Policy Portal, https://voxeu.org/article/covid-19-euro-area-safe-asset-and-fiscal-capacity-are-needed-now (4 May 2020).
- De Grauwe, P. (2020, 18 March 2020), The ECB must finance COVID-19 deficits, Project Syndicate, https://www.project-syndicate.org/commentary/ecb-needs-to-embrace-covid19-monetary-financing-by-paul-de-grauwe-2020-03 (7 April 2020).
- Della Posta, P., E. Marelli and M. Signorelli (2019), An Immediate Solution for the Euro area crisis: A Grand European Investment Plan, in L. Paganetto (ed.), Yearning for Inclusive Growth and Development, Good Jobs and Sustainability, Springer.
- Draghi, M. (2020, 25 March), We face a war against coronavirus and must mobilize accordingly, Financial Times, https://www.ft.com/content/c6d2de3a-6ec5-11ea-89df-41bea055720b (7 April 2020).
- Galì, J. (2020, 17 March), Helicopter money: The time is now, VOX CEPR Policy Portal, https://voxeu.org/article/helicopter-money-time-now (6 April 2020).
- Giavazzi, F. and G. Tabellini (2020, 24 March), Covid perpetual bonds: Jointly guaranteed and supported by the ECB, VOX CEPR Policy Portal, https://voxeu.org/article/covid-perpetual-eurobonds (25 June 2020).
- Goldman Sachs (2020, 24 March), Roaring Into Recession, Goldman Sachs Global Macro Research - Top of mind, 87, https://www.gold-mansachs.com/insights/pages/roaring-into-recession.html (25 June 2020).
- Kirkegaard, J. F. (2020, 26 March), After its Covid-19 emergency, Europe should issue joint recovery bonds, Peterson Institute for International Economics, https://www.piie.com/blogs/realtime-economic-issues-watch/after-its-covid-19-emergency-europe-should-issue-joint-recovery (25 June 2020).
- Saez, E. and G. Zucman (2020, 18 March), Keeping business alive: The government will pay, Social Europe, https://www.socialeurope.eu/keeping-business-alive-the-government-will-pay (25 June 2020).
- Tooze, A. (2020, 28 March), What both the left and the right get wrong about the coronavirus economic crisis, interview by Ezra Klein, VOX, https://www.vox.com/2020/3/28/21195207/coronavirus-covid-19-financial-crisis-economy-depression-recession (25 June 2020).