The economic effects of coronavirus could be minimal if the authorities take action In this regard, Florin Cîţu, the interim Minister of Finance and appointed Prime Minister, wrote on Facebook on Thursday, stressing that this is his personal opinion.
“Fiscal policy” to the rescue ” How should economic, fiscal and monetary policies respond to the economic shock resulting from the COVID-19 epidemic? The answer is directly related to the channel through which this shock is transmitted to the economy. shock that is transmitted on the demand side? Both? “, said Cîţu.
He analyzed both indicators in turn
“If the impact is transferred to the economy on the supply side, that means a reduction in production. People stay at home and production stops, I saw this effect in Chin where in the first quarter the data show recession. Low production means higher prices in the short term and also short-term inflation, “he said.
on the other hand, if the impact is transferred to the economy on the demand side then we see a reduction in demand in the short term, people no longer leave the house and no longer consume goods and services (after accumulating supplies). prices, an increase in stocks and finally a reduction in production, Cîţu wrote on the social network.
The economist ‘s conclusion is that in both cases production is declining, which means lower economic growth.
” International institutions already estimate lower global economic growth in 2020 by about half a percentage point. That is why the first response came from central banks, which cut interest rates. This measure introduces liquidity into the economic system (helps demand) and lowers production costs. But is it enough? Is this the best measure? “The Prime Minister-designate asked.
->
