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The unexpected rapid spread of Covid-19 to Europe and other developed countries, especially densely populated areas in Europe and the US, has caused unprecedented public health measures in recent history. Global mobility of people and goods and globalized economic activity has slowed sharply. Although the phenomenon of economic cycles has been known for over a hundred years and much knowledge of cyclical economic trends has been accumulated, after the epidemic has calmed down, we’ll be faced with an economic crisis we have never seen before. Namely, the response of governments and central banks to the Great Crisis of 2008, which had its source in the US subprime housing market, was a strong fiscal and monetary intervention and the provision of liquidity to economic actors. Some European countries, such as Germany, have implemented austerity measures (which have had numerous opponents in other European countries), thus producing so-called Keynesian effects by implementing (neo) classical economic policies.
The economic crisis of 2008, except for Greece and Croatia, lasted relatively short. Most European economies quickly recovered and started with a new, strong cycle of economic growth that enabled the accumulation of capital in the private sector and the creation of budget surpluses in the public sector. This created the reserves and the capacity for fiscal intervention in the case of the new economic crisis, which would surely have happened without the shock caused by the spread of the coronavirus. Let us take the example of the Hellenic Republic. Thanks to austerity measures implemented by the left-wing government of Alexis Tsipras, Greece's inefficient economy has been improved and today is in an incomparably better condition and will be able to cope more easily with the coming crisis. Following the neo-classical policy-making approach, implementing austerity measures in the public sector, and large-scale privatization projects, Tsipras reduced public debt and stabilized the national economy. The gross domestic product started again to grow in 2017 by 1,5 and in 2018 by 1,8 percent.
Generally speaking, the crisis comes and goes. So will this. Schumpeterian would call such a situation as business cyclical ebbs and troughs; the Keynesians will see it as a deviation from the full-employment; the nee-liberalists see it as normal money and commodities market adjustment, and thus the policymaking responses will differ accordingly (Soumitra Sharma 2015). Only, what we will be faced with are the consequences – for some bitter for others sweet.