Speaker 1: Pushkin from Pushkin Industries. This is Deep Background, the show
Speaker 1: where we explore the stories behind the stories in the news.
Speaker 1: I'm Noah Feldman. We're deep into coronavirus world right now.
Speaker 1: It's the only news story that anyone seems to be
Speaker 1: interested in, and it's also obsessing most of us, myself included,
Speaker 1: on a minute to minute basis. We spend a lot
Speaker 1: of time so far on the show focusing on medical
Speaker 1: aspects of the crisis, and that's I think entirely appropriate
Speaker 1: given where we are in the cycle. But it's also
Speaker 1: not too soon, I think, to start talking about the
Speaker 1: economic consequences of what's happening and what's likely to happen.
Speaker 1: And that's particularly pressing because Congress and the President have
Speaker 1: agreed on a relief plan to address coronavirus one that
Speaker 1: is intended to take a stab at slowing down the
Speaker 1: harms economically that people might be facing in real time,
Speaker 1: and also perhaps at softening the blow of recession that
Speaker 1: seems to be headed our way. In order to make
Speaker 1: some sense of what economists think about the set of
Speaker 1: problems and how they can be solved, I knew I
Speaker 1: wanted to talk to Professor Stephanie Stuntsheva of the Harvard
Speaker 1: Economics Department. Fress or Stuntcheva is what economists call technically
Speaker 1: a hot shot. She's extraordinary scholar, tenured pretty much right
Speaker 1: away upon joining the Harvard University faculty on the French
Speaker 1: Council of Economic Advisors. She's French, as you'll hear in
Speaker 1: a moment from her accent, and all around one of
Speaker 1: the most brilliant young economists in the United States by
Speaker 1: common consensus. Also someone who's done work in the long
Speaker 1: run on the consequences and effects of major government interventions
Speaker 1: in the real world of economic reality. Stephanie, thank you
Speaker 1: so much for agreeing to speak to me as we
Speaker 1: watch Congress passing bipartisan legislation for relief in the context
Speaker 1: of the coronavirus. I knew right away that you were
Speaker 1: the person I wanted to talk to try to understand
Speaker 1: how this is going to work and if it's going
Speaker 1: to work. Because a lot of economists study macroeconomics and
Speaker 1: the big picture, a lot study microeconomics and the individual decision,
Speaker 1: but you're one of the people who does what everyone
Speaker 1: else in the world things economists do, which is study
Speaker 1: the relationship between the micro and the macro. So I'm
Speaker 1: really thrilled that you're willing to do this, and I
Speaker 1: want to start by just asking, how is this economic
Speaker 1: crisis or shock different from the kinds of shocks that
Speaker 1: were used to seeing. Yeah, thank you Noah for having
Speaker 1: me on the show, and in this case, first to
Speaker 1: preface it, it's obviously a huge human tragedy that's unfolding
Speaker 1: right now, and many people are in a very precarious situation.
Speaker 1: So that's that's already a very very different situation. But
Speaker 1: you know, an ECON language, it's both a supply shock
Speaker 1: and a demand side shock at the same time. So
Speaker 1: this is a very very peculiar situation. Typically we have
Speaker 1: mostly one or the other, and typically they're not as
Speaker 1: extremely urgent as you know, a pandemic unfolding. So it's
Speaker 1: not going to be a normal situation, and what follows
Speaker 1: won't be a normal recession. So ECON textbooks don't really
Speaker 1: cover how to deal with a you know, with a
Speaker 1: fallout from a global pandemic. Speaking of the ECON textbooks,
Speaker 1: when you say that it's both a supply shock and
Speaker 1: a demand shock, do you mean that I'll try to
Speaker 1: be the good freshman. Do you mean that the ordinary
Speaker 1: people are not demanding goods and services the way they
Speaker 1: usually would because they're staying home and businesses aren't in
Speaker 1: a position to deliver those goods and services because they're
Speaker 1: not operating. That's exactly right. So there are disruptions at
Speaker 1: every level of production and at every level of consumption
Speaker 1: and work. So because of the social distancing that's necessary
Speaker 1: in order to limit the spread of the virus, you know,
Speaker 1: people have to in a sense stay home and limit
Speaker 1: the amount of economic activity they engage in, which means
Speaker 1: we don't have the usual demand that we're used to.
Speaker 1: At the same time, the whole work and supply chain
Speaker 1: is disrupted as well as workers cannot or should not
Speaker 1: be going to work. So in a sense, it's this
Speaker 1: weird situation where we have to accept you know, economic
Speaker 1: losses in the in the short run because they will
Speaker 1: actually protect health. So the decline and activity right now
Speaker 1: is not just it's not just unavoidable, it's also desired.
Speaker 1: You know, we cannot just self quarantine and prevent the
Speaker 1: virus from spreading and less activity declines. So the key
Speaker 1: right now is really not to focus on these economic
Speaker 1: costs which makes this unusual, but also really to try
Speaker 1: to basically, I'll try to restimulate the economy, but try
Speaker 1: to accept the fact that we need to shut down
Speaker 1: for a little while. So the accepting of the shutting
Speaker 1: down is itself a completely fascinating phenomenon. And a little
Speaker 1: later in the conversation, I want to come back to
Speaker 1: the question of how we know how much is a
Speaker 1: good amount of shutting down to do. But before we
Speaker 1: get there, I just want to hear a little bit
Speaker 1: about the tools that economists do have for other situations
Speaker 1: and how they might be borrowed into this situation. What
Speaker 1: are the what are the tools that you think of
Speaker 1: as having in your economist toolkit. So in an economist
Speaker 1: tool kits, there's there's a lot of tools. There's all
Speaker 1: sorts of you know, taxes and transfers in both directions,
Speaker 1: so either tax cuts, tax increases, increase in transfers decrease
Speaker 1: and transfers. There is monetary policy that can you affect
Speaker 1: the supply of credit or the interest rate. There are
Speaker 1: regulations that can shape how people will act or how
Speaker 1: businesses will act on a day to day basis, and
Speaker 1: so all of these are currently you know, to some
Speaker 1: extent useful and should to some extent be applied. So
Speaker 1: if we start from the immediate situation, the key is
Speaker 1: basically some direct intervention of government on the public health side,
Speaker 1: so a bit of a whatever it takes approach to
Speaker 1: increase hospital capacity, personnel, production of the necessary equipment like
Speaker 1: respirator's ventilators. So this that requires some sort of direct
Speaker 1: intervention and in a sense industrial policy perhaps that we're
Speaker 1: not that we haven't been used to for quite a while.
Speaker 1: It will require direct intervention and lots of funding for
Speaker 1: developing vaccines or anti virals, and so it's really it's
Speaker 1: really a whole, a whole new world here in terms
Speaker 1: of what is needed for that. And in that sense,
Speaker 1: it's not at all the time to worry about government's costs,
Speaker 1: about government's debt and deficits, because the less we act now,
Speaker 1: the worst it will get later. If you want, like
Speaker 1: if you think of a household or family, you know
Speaker 1: it's exactly for such bad times and health emergencies that
Speaker 1: we save money typically, So saying for the government, this
Speaker 1: is why we save money. It's for these emergency situations
Speaker 1: now and then we have other tools which are on
Speaker 1: the ensuring the supply of essential services side. Uh. You know,
Speaker 1: there's there's some things that still need to be done
Speaker 1: for people to have food and you know, clean water
Speaker 1: and sanitation, so those still need to work. And for those,
Speaker 1: you know, direct regulation of how it should look in
Speaker 1: a workplace, what amount of distance is safe, what essential
Speaker 1: businesses should keep doing. Uh. Those are also tools that
Speaker 1: can be applied here. And one thing that we notice
Speaker 1: the past days, which is again very unusual, is that
Speaker 1: perhaps the price mechanism doesn't work very well. You saw
Speaker 1: perhaps the Amazon sanitizer prices UM that's spiked up, and
Speaker 1: so perhaps some amount of rationing imposing that there's a
Speaker 1: limit on what you can buy at once, so that
Speaker 1: everybody gets some basic supply. Those who another you know,
Speaker 1: another instrument that the government may want to apply. And
Speaker 1: then the final is perhaps more standard. It's what you
Speaker 1: alluded to initially, and when we have a perhaps more
Speaker 1: standard recession, which would be to support you know, the
Speaker 1: demand on both the household side and maintain businesses alive
Speaker 1: while this big shock passes UM. Because you know, the
Speaker 1: health shock is not the only shock that is a
Speaker 1: threat here. It is the most immediate but letting people
Speaker 1: slide into poverty into unemployment can be you know, disastrous
Speaker 1: and very detrimental and carry a huge human toll that
Speaker 1: we also want to avoid. So we want to also
Speaker 1: flatten the recession curve in a sense, not just not
Speaker 1: just the pandemic curve. So there's a range of tools
Speaker 1: and all of these that we can that we can apply.
Speaker 1: So let's take it in two parts. Let's start with
Speaker 1: what you might call you call them, I think old
Speaker 1: fashioned interventions, and I think of these as you know,
Speaker 1: quasi autocratic interventions, where the government says, you know, company,
Speaker 1: you must now devote yourself to producing this particular vaccine,
Speaker 1: or you know you factory you must make these medical masks.
Speaker 1: Industrial policy of the old fashioned top down sort. Prices
Speaker 1: are secondary. And then alongside that comes the emergency version
Speaker 1: of the same, which includes, as you point out, rationing,
Speaker 1: and I guess could also include price limits, right. I mean,
Speaker 1: in this theory, the government could tell Amazon you can't
Speaker 1: charge five hundred dollars for a bottle of hand sanitizer,
Speaker 1: or you can't charge thirty dollars for a tube of
Speaker 1: toilet tissue. So are those I mean, am I combining
Speaker 1: things that shouldn't be combined. There or they all seem
Speaker 1: to have in common to the lay person the idea
Speaker 1: of determination from above, and of course that raises the
Speaker 1: question of do we trust the people above to do
Speaker 1: it right? Absolutely, this is again this is very unusual.
Speaker 1: We don't often resort to such kind of emergency emergency actions,
Speaker 1: but we see it right now in all countries being
Speaker 1: rolled out basically essentially forcing people to stay at home,
Speaker 1: to limit their interactions, forcing companies to impose some different
Speaker 1: rules of working, whether it's remote work or safe distances, etc. So, yes,
Speaker 1: this is very unusual, and it's because of the emergency
Speaker 1: of the virus spreading. But there are more, there are
Speaker 1: more standard strategies that should be combined as well, and
Speaker 1: that's what I would call really the the econ interventions
Speaker 1: per se. So all these things about insuring the health,
Speaker 1: polic health and the direct restrictions, they go a bit
Speaker 1: beyond just basic economics. But now the pure economic interventions
Speaker 1: they also come in several in several forms. So the
Speaker 1: first one is already alluded to. It is to already
Speaker 1: accept that some economic classes which will actually be necessary
Speaker 1: to protect health right now, and you know, we cannot
Speaker 1: totally totally ignore the economic costs, but in the short run,
Speaker 1: we just need to limit the health the health impacts.
Speaker 1: And what we're trying to do at the same time
Speaker 1: is not to restimulate the economy. So that's what I'm saying.
Speaker 1: It's not a standard recession where we're trying to re
Speaker 1: you know, recondle the economy's activity, but whether we're trying
Speaker 1: to plug the holes in the budgets of the most
Speaker 1: vulnerable households and businesses. And the first thing that this
Speaker 1: will imply is to protect basically our productive capacity. So
Speaker 1: when the risk recedes and when we can actually start
Speaker 1: going out again and producing again, that it's ready to go.
Speaker 1: So that's not obvious. It might sound obvious that one
Speaker 1: day we can turn the lights off in the factory,
Speaker 1: the next day we can restart, but that's not quite
Speaker 1: true because we have to avoid a temporary shock from
Speaker 1: becoming permanent. You know, if businesses cannot bridge this period,
Speaker 1: they can go out of business. If workers cannot sustain
Speaker 1: themselves over that period, that will be terrible for them
Speaker 1: trying to find jobs again later. So the bridging here
Speaker 1: is very important, and that's what I mean by social insurance.
Speaker 1: So this happened at several levels. One is to ensure
Speaker 1: that workers actually remain paid, and countries are thinking of
Speaker 1: different policies here. One would be to strength and layoff
Speaker 1: and recall policies so that you know, workers can temporarily
Speaker 1: go home, be paid some fraction or full salary and
Speaker 1: be able to come back easily. Ensure that firms can
Speaker 1: weather the storm with easier credit even you know, imagining
Speaker 1: waving loans or giving direct assistance where needed in general,
Speaker 1: you know, keeping credit lines open for those that simply
Speaker 1: cannot survive in the short run, but that would do
Speaker 1: very well in the medium run. That's the businesses we
Speaker 1: don't want to go out of business. And then support
Speaker 1: the financial system to some extent too, so that you
Speaker 1: know there is credit where needed and money where needed.
Speaker 1: And then on the on the you know, household side,
Speaker 1: extremely important to support, you know, support the ability of
Speaker 1: households to have to have their budgets not completely decimated
Speaker 1: so that when the economy goes back to full capacity
Speaker 1: that they actually can you know, restimulate demand. So here
Speaker 1: again it's mostly social insurance because they're lots of new needs.
Speaker 1: There's a need to bridge this very strange period, and
Speaker 1: there will be extra health spenning that will require households
Speaker 1: to have extra money. And one important thing to note
Speaker 1: here is that it's a situation that's full of what
Speaker 1: economists call externalities, which means something I do affects others
Speaker 1: as well. So if I go out and I'm sick,
Speaker 1: I'm going to hurt others. If I cannot do my job,
Speaker 1: for instance, as a as a cleaner, it's going to
Speaker 1: affect others. So there's lots of externalities here. So even
Speaker 1: for people who don't necessarily worry too much about inequality
Speaker 1: or social inequities, helping people over their current economic difficulties
Speaker 1: is extremely important because it will keep people at home
Speaker 1: where they should be, it will reduce the spread of
Speaker 1: the virus, it will help doing essential jobs, so to
Speaker 1: actually help everyone. So they're very strong efficiency arguments for
Speaker 1: doing that. So you know, there's lots of packages that
Speaker 1: have been proposed here which all make some sense. One
Speaker 1: is to have paid six leave, which is also very
Speaker 1: complementary to the pure public health intervention making people stay
Speaker 1: at home. Unemployment insurance that should be given out much
Speaker 1: more leniently and much faster even partial unemployment insurance, food support,
Speaker 1: and you know, any safety net measure that can be
Speaker 1: much much more relaxed and generous. At the moment. What
Speaker 1: is tough is that there's a very quick need for action,
Speaker 1: and that's why some people have suggested to not think
Speaker 1: too much and worry too much about who exactly needs
Speaker 1: help right now, but to go a bit all out
Speaker 1: and give basically a lumpsom transfer, something like a universal
Speaker 1: basic income immediately, like sending every American a X dollar
Speaker 1: check right now, perhaps more for households with kids and
Speaker 1: things like that. And that's an unusual situation again, and
Speaker 1: if it is very difficult to see who needs it,
Speaker 1: time is very precious, so that sense, it could make
Speaker 1: sense in this situation to just try to maintain households
Speaker 1: budgets and not worry excessively about the debt and deficits
Speaker 1: that's built up. But it's of course a very difficult
Speaker 1: decision and has to be has to be discussed very carefully,
Speaker 1: because there is absolutely no perfect magic bullet here that
Speaker 1: will save us at no cost. So writing a check
Speaker 1: to everybody is obviously one of the options. And our
Speaker 1: colleague Jason Furman in the AT the Kennedy School has
Speaker 1: been recommending that for a little while now. Before we
Speaker 1: get there, though, it's worth checking into what Congress has
Speaker 1: done and trying to see if it matches what you're
Speaker 1: what you're saying, And my instinct from listening to you
Speaker 1: is that it doesn't. So you know, there was an
Speaker 1: article in The New York Times published by the Editorial
Speaker 1: Board so an editorial arguing that the congressional plan really
Speaker 1: doesn't cover nearly eighty percent of Americans with respect to
Speaker 1: sick leave because it has an exemption for companies with
Speaker 1: more than five hundred employees, which a little more than
Speaker 1: half the economy, a little more of half of American workers.
Speaker 1: That it has another exemption for companies with fewer than
Speaker 1: fifty workers, and that's apparently nearly another quarter of the
Speaker 1: workers in the country. And the upshot is that we
Speaker 1: don't really have in place the kind of social insurance
Speaker 1: model that you're describing, even before we get to handing
Speaker 1: out cash to people. Am I am I getting that right?
Speaker 1: That that would be really inadequate in your account, there
Speaker 1: are a lot of constraints on policymakers given this very
Speaker 1: unusual situation, So drastic action is very tough, but many
Speaker 1: countries have taken it, and for instance, Germany announced a
Speaker 1: very sweeping plan, which was almost a surprise given that
Speaker 1: Germany has been in the past years, you know, advocating
Speaker 1: a lot of a lot of very conservative fiscal policy.
Speaker 1: But it seems like they did save their you know,
Speaker 1: their cartridges for such an extreme situation and giving a
Speaker 1: sense that in this extreme situation, if you have to
Speaker 1: stay at home, if you are lacking you know, necessities,
Speaker 1: they will be provided by the garment. Giving sweeping, you know,
Speaker 1: sweeping generous insurance to you and tiding over private small
Speaker 1: businesses that cannot survive seems quite quite critical. It's critical,
Speaker 1: of course, to save lives in the short run, it's
Speaker 1: also critical to you know, damn the blow that will
Speaker 1: happen to the economy, and that can you know, make
Speaker 1: the pain last much longer. As I said, you know,
Speaker 1: protecting the productive capacity is important and entails not letting
Speaker 1: businesses die which could have been surviving well, not breaking
Speaker 1: employment relationships that then will be very costly to restore.
Speaker 1: So we can soften the blow by acting more generously
Speaker 1: now and saving you know, resources on this later. If
Speaker 1: we don't act enough. Now we're going to untie all
Speaker 1: these economic links that take a lot of time to form.
Speaker 1: We're going to push many people in very precarious situations
Speaker 1: to have long lasting effects, and we're going to decimate
Speaker 1: businesses which should have survived, and that will make the
Speaker 1: following recession potentially way costlier than the funds we may
Speaker 1: spend now to soften the blow. So I hear you
Speaker 1: saying that there are really two distinct advantages to both
Speaker 1: to the social insurance model and to cash transfers. One
Speaker 1: is to alleviate immediate short term suffering and make sure
Speaker 1: people have enough, and the second is to cushion a
Speaker 1: little bit the blow. And in this respect of the
Speaker 1: possibility of going deeper and deeper into recession, I'm wondering,
Speaker 1: when it comes to a one time cash transfer, is
Speaker 1: it more about trying to help people in the short run,
Speaker 1: because it seems like that would run out pretty quickly
Speaker 1: for a lot of people, or is it more about
Speaker 1: giving people something that would enable some degree of stimulus
Speaker 1: going forward when people are able to go back to
Speaker 1: work and the economy is start starting to get rolling again.
Speaker 1: And that might go to the question of the timing
Speaker 1: of a cash payment like that. Yeah, I think in
Speaker 1: the short run the most important is to just as
Speaker 1: I said, plug plug the holes and people's budget constraints.
Speaker 1: So people will suddenly not be able to get income
Speaker 1: because they have to stay at home. So whether it's
Speaker 1: you know, paid sick leave or letting them get a
Speaker 1: fraction of their salary again, whether we call it unemployment insurance,
Speaker 1: whether we give some cash transfer, food support, any other
Speaker 1: safety net measures, those are extremely critical in the short run.
Speaker 1: And it's not about stimulating aggregate demand or the economy again,
Speaker 1: that will wait for later. And then later, you know,
Speaker 1: the textbooks can be applied again in terms of do
Speaker 1: we want to give more tax cuts at this level
Speaker 1: of income or at that level of income. Do we
Speaker 1: want to give a bit more transfers here, a bit
Speaker 1: less transfers here, What do we want to do unemployment insurance?
Speaker 1: That part will be a different discussion right now. In
Speaker 1: the short run, any hole that can be plugged should
Speaker 1: be plugged to help people bridge this very difficult period.
Speaker 1: You know, when a country is in bad recession, not
Speaker 1: because of an external shock like this, but because of
Speaker 1: something more fundamental to the economic cycle, or even in
Speaker 1: depression as a result of the economic cycle, it can
Speaker 1: be really slow and painful to grow out of it.
Speaker 1: In this instance, presumably when this is over, although we'll
Speaker 1: still be worried about our future in which this could
Speaker 1: happen more frequently. Confidence, I would think would come back
Speaker 1: pretty quickly because people will be able to remember. You
Speaker 1: won't be years from now, so people will be able
Speaker 1: to remember what it was like before, and they should,
Speaker 1: in principle be able to get back to the confidence
Speaker 1: levels that they had previously obviously updated for the reality
Speaker 1: that there can indeed be a pandemic that crunches us.
Speaker 1: Does that sound like, oh, hopelessly optimistic way of thinking
Speaker 1: about it. Let's say it's the more optimistic way to
Speaker 1: think about it, which is possible if nothing else happens
Speaker 1: in the economy, and if we manage to contain this virus,
Speaker 1: and if we take all the actions to often the
Speaker 1: blow that we spoke about previously, So if we managed
Speaker 1: to not turn what should be a temporary shock, although
Speaker 1: a very severe one, into a more permanent one because
Speaker 1: we untie all possible economic relationships and break down businesses
Speaker 1: and many parts of the economy, it is possible in
Speaker 1: principle that we could jump back to a situation where
Speaker 1: things are better. But how long this process will take
Speaker 1: right now and how much we will actually destroy of
Speaker 1: economic activity is very much up in the air. The
Speaker 1: point that you keep making about untying economic relations is
Speaker 1: it really seems like a really profound one. And the
Speaker 1: metaphor that keeps coming into my mind is sort of
Speaker 1: like a fall of Rome, a situation, you know, you
Speaker 1: have a very developed economy and it's got lots of
Speaker 1: people doing complex things in relationship to each other, and
Speaker 1: then there's an external shock like the fall of Rome,
Speaker 1: and then instead of everyone bouncing back and rebuilding Rome,
Speaker 1: you get something like the dark Ages where people can't
Speaker 1: really rebuild those those kinds of ties. And maybe that's
Speaker 1: too extreme a way of thinking about it, but is
Speaker 1: that sort of what you're describing when you talk about
Speaker 1: the breaking of economic relations? You mean that I lose
Speaker 1: my job, and then I stop shopping at the corner store,
Speaker 1: and then the corner store stops getting supplies from the
Speaker 1: place which it orders from, and then none of us
Speaker 1: can exactly rebuild that overnight. We have to slowly, gradually
Speaker 1: each redevelop each of those links exactly. There's so many
Speaker 1: links between workers and companies, between customers and suppliers, especially
Speaker 1: also in the very complex supply chains we have right now.
Speaker 1: So all these links are there and arnstorm sort of equilibrium,
Speaker 1: and once you start breaking them down, it's going to
Speaker 1: simply take time to rebuild. It's not as smooth as
Speaker 1: simply going back to the way things were at once.
Speaker 1: These are the things people mean when they say we
Speaker 1: need to maintain the productive capacity. We need to avoid
Speaker 1: destroying links in the economy which are productive and should
Speaker 1: normally be saved and are simply suffering in the short run,
Speaker 1: and we need to bridge that short run. It seems
Speaker 1: to me like we're going to need economists in this
Speaker 1: next phase of dealing with Corona just about as much
Speaker 1: as we need physicians in the first phase. I mean,
Speaker 1: obviously the physicians are the ones who are dealing in
Speaker 1: the immediate term with people's health and lives, but people's
Speaker 1: health and well being in the long run really does
Speaker 1: depend on being in a functioning economy. I mean, we
Speaker 1: know that in a down economy, more people will become sick,
Speaker 1: more people will die because there will be poverty. Assuming
Speaker 1: we don't have a perfect social insurance system, and we
Speaker 1: in the United States definitely don't. So it seems as
Speaker 1: though the role of the economists as sort of physicians
Speaker 1: of the economy is going to be absolutely central here. Yes,
Speaker 1: very soon. The economic costs on people who fall into poverty,
Speaker 1: who have no more income to take care of their
Speaker 1: of their basic needs for just basic necessities, take care
Speaker 1: of their health in a very basic way, that's going
Speaker 1: to have gigantic costs and antic human costs, so those
Speaker 1: we also need to avoid. It's hard to rank things
Speaker 1: because every every situation sounds very bad, whether it is
Speaker 1: that your sick, whether it is that you have nothing
Speaker 1: to eat, or that you lose you know, your shelter,
Speaker 1: or your your your job. All of these are bad.
Speaker 1: So there will be a role for economists for sure
Speaker 1: to ensure that the poverty doesn't take a huge tool
Speaker 1: as well. We'll be back in just a moment. Are
Speaker 1: there any historic examples that you can think of off
Speaker 1: the top of your head of where societies did come
Speaker 1: back from massive shocks like this one? I mean, one
Speaker 1: shock that seems maybe vaguely comparable to the shock of
Speaker 1: disease is the shock of war, which also presumably affects
Speaker 1: both supply and demand side. Is there I mean, is
Speaker 1: there sort of general learning among economists on how how
Speaker 1: hard it is or how long it takes to bounce back. Yeah,
Speaker 1: I think quantifying the severity of the shock, the length
Speaker 1: of time it will take to recover, those are really
Speaker 1: really difficult right now. All the other shocks like wars
Speaker 1: or other big pandemics or epidemics happened at very different
Speaker 1: times in very different contexts, and so it's just it's
Speaker 1: just impossible to draw quantitative conclusions from there. But in
Speaker 1: the advice that economists are giving today about, for instance,
Speaker 1: the need to act pretty generously and very quickly, that
Speaker 1: is very much informed by you know, historical experiences where
Speaker 1: it was just critical to contain things. And it's also
Speaker 1: you know, informed by even the very short run experience
Speaker 1: of different countries over the past weeks. So we learn
Speaker 1: a bit in real time as well. We see what
Speaker 1: happens in other countries in this case, you know, sadly
Speaker 1: in Europe and in Asia about different different paths that
Speaker 1: countries too, So we very much learn in real time.
Speaker 1: But again it's just impossible to predict how long, how severe,
Speaker 1: and what it will look like, Stephanie, I really want
Speaker 1: to thank you for this very clear analysis and very
Speaker 1: clear set of prescriptions. You know, I think tell me
Speaker 1: if I'm summing this up correctly. But what I'm hearing
Speaker 1: you say is, first of all, extremely unusual situation relative
Speaker 1: to the usual shocks. Ordinary tools of economics not immediately
Speaker 1: obviously applicable. We need strong social insurance to make sure
Speaker 1: that we meet people's immediate economic needs, but we also
Speaker 1: need some sort of transfers of wealth in order to
Speaker 1: soften the long run effects of the recession that we're
Speaker 1: going to go into, so that we don't break economic
Speaker 1: ties that exist and make it harder to climb out
Speaker 1: of it. That does that sound like, you know, Stephanie
Speaker 1: Stantcheva's official takeaways, I would say more than transfers of wealth,
Speaker 1: it would be really social entrance to bridge this shock,
Speaker 1: both on business sites and on household sites. So that's
Speaker 1: the most most critical. On top of course the public
Speaker 1: health intervention, which is a first order, just not in
Speaker 1: my expertise, but yes, bridging the gap for households and
Speaker 1: businesses in the short run will also make the longer
Speaker 1: run look much better. Thank you. That's very very helpful.
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