Simply put, think of the economy as comprising two sectors - non-essential services that we can shut down to limit human interactions and hence the spread of the disease, and essential services that we can't . We can and should close down the N sector until some combination can be achieved of growing immunity, widespread testing to quickly find and isolate cases, and, if we're very lucky, a vaccine let us return to normal life.
How big is the N sector? Miguel Faria-e-Castro of the St Louis Fed summarises estimates that are as good as any: 27 to 67 million people, which he averages to 47 million. That's a lot; we could be looking at a temporary decline in real GDP of 30 per cent or more. A more important point is that if we fail to provide enough help to those afflicted by this crisis, they will be forced to sharply cut their spending even on goods and services we can still produce, leading to a gratuitous further rise in unemployment So aid to those in the shutdown sector actually does include an element of conventional fiscal stimulus, even though that's not its central goal.
But why is borrowing so cheap? Where's the money coming from? The answer is private savings that have nowhere else to go. When we finally get data on what's happening now, we'll surely see a sharp rise in private saving, as people stop buying what they can't, and a fall in private investment, because who's going to build houses or office parks in a plague?
Singapore Latest News, Singapore Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »
Source: ChannelNewsAsia - 🏆 6. / 66 Read more »