The global fiscal response to COVID-19: Risks and repercussions

Makin, Anthony J. and Layton, Allan (2021) The global fiscal response to COVID-19: Risks and repercussions. Economic Analysis and Policy, 69. pp. 340-349. ISSN 0313-5926


Abstract

Governments around the world responded to the COVID19 crisis (CVC) by aggressively deploying fiscal policy to boost health expenditure, income transfers and increased welfare payments, as well as wage subsidies to firms to retain employees to minimize short term unemployment. A fiscal response was in principle both necessary and timely, but the nature of the responses adopted by governments differed markedly around the world. After describing the global macroeconomic impact of the CVC and its effect on budget deficits and public debt levels, this paper critically evaluates the global fiscal response with reference to comparable historical episodes. The analysis suggests some fiscal responses were too expansive and of the wrong form. The paper then highlights the future macroeconomic risks arising from the highly elevated public debt levels the CVC has caused, concluding that fiscal consolidation rather than further fiscal ‘stimulus’ will be needed to address the parlous fiscal legacy of the crisis.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Files associated with this item cannot be displayed due to copyright restrictions.
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Business (18 Jan 2021 -)
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Business (18 Jan 2021 -)
Date Deposited: 23 Jun 2022 23:28
Last Modified: 29 Jun 2022 00:59
Uncontrolled Keywords: COVID 19 crisis, Fiscal policy response, Public debt
Fields of Research (2008): 14 Economics > 1402 Applied Economics > 140212 Macroeconomics (incl. Monetary and Fiscal Theory)
Fields of Research (2020): 38 ECONOMICS > 3801 Applied economics > 380112 Macroeconomics (incl. monetary and fiscal theory)
Identification Number or DOI: https://doi.org/10.1016/j.eap.2020.12.016
URI: http://eprints.usq.edu.au/id/eprint/49268

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