Fiscal space at the time of Covid-19

For now, fiscal policy must continue to prop up activity as much as possible, with the decisive support of monetary policy


The best illustration of recent economic events is likely a painting by the Belgian surrealist painter Rene Magritte with a graph of the collapse of GDP and the phrase “this is not a recession.” Because what we are experiencing is not a standard recession, but something truly extraordinary, unique, unrepeatable. Recessions are the culmination of excesses, be it an inflationary overheating that ends with rate hikes, or the bursting of an investment or financial bubble. The excess is gradually reabsorbed, which requires time and a certain reallocation of resources, since there are activities tha...

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