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The Socio-Economics of Pandemics Policy

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  • Snower, Dennis J.

    (Hertie School of Governance)

Abstract

In response to the Covid-19 pandemic, governments around the world have provided a massive fiscal and monetary stimulus. While this policy is welcome in the short run, it does not address the underlying problem in the medium and long run. The reason is that the pandemic has not given rise to a generalized shortfall in aggregate demand. Rather, it has generated a Great Economic Mismatch, characterized by deficient demand for things requiring close physical interactions among people and deficient supply of things compatible with social distancing, where appropriate. Expansive macroeconomic policy can stimulate aggregate demand, but when social distancing is enforced, it will not stimulate production and consumption whenever this demand is satisfied through physically interactive activities. To overcome the Great Economic Mismatch, "readaptation policies" are called for. In the medium run, these policies promote a redirection of resources to activities compatible with social distancing; the long run, these policies make economies more resilient to unforeseen shocks that generate a Great Economic Mismatch. Once the pandemic is over, a more profound rethinking of decision making - in public policy, business and civil society - is called for. First, decision makers will need to supplement the current focus on economic efficiency by greater emphasis on economic resilience. Second, economic policies and business strategies will need to focus less on incentives for selfish individuals and more on the mobilization of people's prosocial motives. Finally, to encourage people around the world to cooperate globally in tackling global problems, policy makers at local, national and global levels will need to encourage people around the world to cooperate globally in tackling global problems, with the aid of two powerful tools that humans throughout history have used to coordinate their efforts: identity-shaping narratives and institutions of multi-level governance.

Suggested Citation

  • Snower, Dennis J., 2020. "The Socio-Economics of Pandemics Policy," IZA Policy Papers 162, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izapps:pp162
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    References listed on IDEAS

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    1. , & Lima de Miranda, Katharina, 2020. "Recoupling Economic and Social Prosperity," CEPR Discussion Papers 14421, C.E.P.R. Discussion Papers.
    2. Snower, Dennis J, 1994. "Converting Unemployment Benefits into Employment Subsidies," American Economic Review, American Economic Association, vol. 84(2), pages 65-70, May.
    3. Wilson, David Sloan & Ostrom, Elinor & Cox, Michael E., 2013. "Generalizing the core design principles for the efficacy of groups," Journal of Economic Behavior & Organization, Elsevier, vol. 90(S), pages 21-32.
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    Cited by:

    1. Peter A.G. van Bergeijk, 2021. "Pandemic Economics," Books, Edward Elgar Publishing, number 20401.
    2. Santiago Lago-Peñas & Jorge Martinez-Vazquez & Agnese Sacchi, 2022. "Country performance during the Covid-19 pandemic: externalities, coordination, and the role of institutions," Economics of Governance, Springer, vol. 23(1), pages 17-31, March.
    3. Katharina Lima de Miranda & Dennis J. Snower, 2022. "The societal responses to COVID-19: Evidence from the G7 countries," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 119(25), pages 2117155119-, June.
    4. Jan Krzysztof Solarz & Krzysztof Waliszewski, 2020. "Holistic Framework for COVID-19 Pandemic as Systemic Risk," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 340-351.
    5. Arsena Gjipali & Valbona Karapici & Nevila Baci, 2023. "How Do the Labour Force Characteristics Encounter COVID-19 Economic Consequences—A Canadian Experience," Administrative Sciences, MDPI, vol. 13(9), pages 1-13, September.

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    More about this item

    Keywords

    COVID-19; pandemics policy; macroeconomic policy; economic mismatch; economic resilience;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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