全球智库信息集成服务系统(G2TT): Post COVID-19 Exit Strategies and Emerging Markets Economic Challenges

G2TT

来源类型	Working Paper
规范类型	报告
DOI	10.3386/w27966
来源ID	Working Paper 27966
	Post COVID-19 Exit Strategies and Emerging Markets Economic Challenges
	Joshua Aizenman; Hiro Ito
发表日期	2020-10-19
出版年	2020
语种	英语
摘要	We outline two divergent exit strategies of the U.S. from the post COVID-19 debt-overhang, and analyze their implications on Emerging Markets and global stability. The first strategy is the U.S. aiming at returning to the 2019, pre-COVID mode of loose fiscal policy and accommodating monetary policy. The short-term benefits of this strategy include faster economic growth as long as the snowball effect – the difference between the interest rate on public debt and the growth rate – is negative. This strategy may entail a growing tail risk of a deeper crisis triggered by a future reversal of the snowball effect, inducing a deeper future sudden stop crises and instability of Emerging Markets. We illustrate this scenario by evaluating Emerging Markets’ lost growth decade during the 1980s, triggered by the massive reversal of the snowball effect in the U.S. during 1974-1984. The second strategy entails a two-pronged approach. First, turning U.S. fiscal priorities from fighting COVID’s medical and economic challenges, towards investment in social, medical and physical infrastructures. Second, with a lag, promoting a gradual fiscal adjustment aiming at reaching overtime primary-surpluses and debt resilience. We illustrate this scenario by reviewing the exit strategy of the U.S. post-WWII, and its repercussions on the ‘Phoenix Emergence’ of Western Europe and Japan from WWII destruction. The contrast between the two exit strategies suggests that the two-pronged approach is akin to an upfront investment in greater long-term global stability. We also empirically show how lowering the cost of serving public debt has been associated with higher real output growth.
主题	International Economics ; International Finance ; International Macroeconomics ; COVID-19
URL	https://www.nber.org/papers/w27966
来源智库	National Bureau of Economic Research (United States)
引用统计
资源类型	智库出版物
条目标识符	http://119.78.100.153/handle/2XGU8XDN/585640
推荐引用方式 GB/T 7714	Joshua Aizenman,Hiro Ito. Post COVID-19 Exit Strategies and Emerging Markets Economic Challenges. 2020.

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w27966.pdf（1054KB）	智库出版物		限制开放	CC BY-NC-SA	浏览