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How to Avoid a W-Shaped Recession

As policymakers plan their COVID-19 responses, policymakers should remember a simple rule of thumb: let “W” stand for premature "withdrawal" of public-health or economic-stimulus measures. As previous crises have shown, such proposals should be avoided like the plague.

CAMBRIDGE – “Those who cannot remember the past are condemned to repeat it,” George Santayana famously quipped in 1905. It is a phrase that has been repeated for over a century, but rarely heeded. As COVID-19 decimates the global economy, our understanding of history could be the difference between a V- or U-shaped recession and a W-shaped one, in which incipient recovery is followed by successive relapses.

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