by Abigail Devereaux
The American Institute for Economic Research
The novel coronavirus has done severe economic damage all over the globe. The Congressional Budget Office (CBO) stated on June 1, 2020 that it could take nearly a decade for the economy to grow back to levels forecasted this January. As economists, we want to understand just how much damage has been done to what people and sectors and how that damage was perpetrated. There’s usually more than one perp in a Depression.
First, the coronavirus obviously causes direct health effects that can impact economies. Note that economists like myself are not suggesting illness or death is bad primarily because of their economic effects; the social and personal costs of pandemics are devastating on their own. Second, people voluntarily change their consumption, work, and personal behavior in reaction to pandemics, without the need for any intervention. Third, political interventions like stay-at-home orders and business closures coercively change consumption, work and personal behaviors in ways that impact economies.