Economic policy lessons from two years with the Covid-19 pandemic

The paper provides a discussion and summary of the main economic policy lessons learned from the Covid-19 pandemic. First, we discuss how managing the series of partial restrictions on activity and reopenings since March 2020 involves a complex trade-off between health, the economy, public well-being and constitutional rights, and provide insights on how the trade-offs can be operationalised to assist the political process. Second, we survey the literature on the effectiveness of various containment measures that have been implemented across the globe to constrain the corona pandemic. Third, we analyse the anatomy of the business cycle in the last two years, which significantly differs from standard business cycles due to the nature of the shock and the unconventional policy measures that have been used. Fourth, we discuss the value of the extensive short-time-work program (STW-program) introduced to preserve job matches. Fifth, a novel type of policy measures directed at supporting businesses are analysed. Sixth, we argue that since the prospect of a corona-free world probably is not imminent, it is advisable to maintain a well-designed emergency program that builds on revaccination programs, surveillance of the epidemic situation, and a package of relevant policy instruments that can be easily scaled if the situation escalates.