The good thing about coronavirus
Charles Wyploszbe much more difficult to ignore the facts or blame foreigners for national failings. This
could be the silver lining of the disaster that awaits the world. It would be a tragic
failure if the lessons that we are about to learn were to end up wasted.
Meanwhile, depending on its extent and duration, the epidemic will hurt economic
growth. Will these differences in treating the epidemic also characterise the economic
policy responses? The linkage is unlikely to be straightforward. The Chinese authorities
all but shut down the economy with one click; they can order a restart as easily while
pouring in cash to soften the economic and political blow. Italy has already started to
ask for leniency from the European Commission regarding its budget deficit. The large
central banks have signalled that they are monitoring the financial markets carefully
and the Bank of Japan has started to buy shares. This may suggest that the less adequate
the treatment of the epidemic itself has been, the more forceful will be the economic
policy reaction – as if “money can buy me love”.
The deeper question is what drives the differences. This is a huge question. The
simple answer is institutions, but institutions are the result of history, culture, ethnic
divisions, political regimes and election laws where applicable. Deeper still is the
question of the price that societies attribute to the value of life, which brings in religion
and spiritual values. Maybe the only safe prediction that can be made is that, in the
years to come, researchers in many fields will be busy disentangling these issues.
About the author
Charles Wyplosz is Emeritus Professor of International Economics at the Graduate
Institute, Geneva, where he was Director of the International Centre for Money and
Banking Studies. Previously, he has served as Associate Dean for Research and
Development at INSEAD and Director of the PhD programme in Economics at the Ecole
des Hautes Etudes en Science Sociales in Paris. He is a CEPR Research Fellow and has
served as Director of the International Macroeconomics Programme at CEPR. He is
also CEPR’s Policy Director and Co-Chair of the Board of the journal Economic Policy.