By Nicholas Deygoo
The novel coronavirus is a black swan type of event, one that no one could have and would have predicted at the end of 2019. On New Year’s Eve 2019, if you had told me that 3 months into next year, most of the major economies would have been shut down, causing oil prices to head into a tailspin and iconic businesses to go into bankruptcy, I would have called it nonsense.
However, here we are in 2020, and what was once the mysterious Wuhan Virus is now the pandemic known as the novel coronavirus or COVID-19. The best option we have to fight the virus is the epidemiological world’s equivalent of blunt force trauma – social distancing.
While social distancing is necessary, it wreaks havoc on an economy because it hits at the demand for goods and services. Businesses facing this pandemic need to adapt in order to survive. However, because of how extremely rare and devastating an event like the coronavirus is, businesses also need coordinated policy responses such as social safety nets, fiscal spending, and even deficit spending. Government also needs to assist with ensuring that there is excess liquidity in the banking sector; these are all hallmarks of policy response in the past financial crisis.
