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The Fiscal Fight Against COVID-19

Governments should rely on fiscal rather than monetary measures when responding to natural disasters or epidemics such as the new COVID-19 coronavirus. Above all, policymakers must act quickly, and – particularly in the case of Japan – not be swayed by misleading statements regarding the level of public debt.

TOKYO – As the new COVID-19 coronavirus continues to spread rapidly outside China, medical professionals and policymakers around the world are fighting to contain the outbreak. But what role can or should governments play in this situation – or, for that matter, when natural disasters strike?

The Chinese authorities already have loosened monetary policy in response to the outbreak, an understandable move in view of the virus’s serious effect on key economic sectors, notably manufacturing and transport. But monetary measures are a roundabout way of coping with real disruptions such as epidemics or natural calamities. Fiscal policies, on the other hand, are more likely to have a direct impact on economic challenges.

Alongside the efforts of medical professionals, therefore, governments should introduce various initiatives and regulations to contain the COVID-19 epidemic – such as ensuring adequate medical supplies and providing airplanes to evacuate citizens from affected areas abroad.

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