彼得森经济研究所-大流行时代的经济政策：世界必须如何准备（英文）-2021.4正式版

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EconomicPolicyforaPandemicAge

HowtheWorldMustPrepare

MonicadeBolle,MauriceObstfeld,andAdamS.Posen,editorsApril2021

1750MassachusettsAvenue,NW|Washington,DC20036-1903USA|+1.202.328.9000|

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Contents

1ECONOMICPOLICYFORAPANDEMICAGE:ANINTRODUCTION

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MonicadeBolle,MauriceObstfeld,andAdamS.Posen

2NOVELVIRALVARIANTS:WHYTHEWORLDSHOULDPREPAREFOR

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CHRONICPANDEMICS

MonicadeBolle

3THEPANDEMICISNOTUNDERCONTROLANYWHEREUNLESSITIS

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CONTROLLEDEVERYWHERE

ChadP.Bown,MonicadeBolle,andMauriceObstfeld

4USVACCINEROLLOUTMUSTSOLVECHALLENGESOFEQUITYANDHESITANCY

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DavidWilcox

5THEEUROPEANUNION’STROUBLEDCOVID-19VACCINEROLLOUT

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JacobFunkKirkegaard

6LESSONSFROMEASTASIAANDPACIFICONTAMINGTHEPANDEMIC

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MartinChorzempaandTianleiHuang

7PERSISTENTCOVID-19:EXPLORINGPOTENTIALECONOMICIMPLICATIONS

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OlivierBlanchardandJeanPisani-Ferry

8COVID-19WIDENSTHEGENDERGAPINLABORFORCEPARTICIPATION

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SimeonDjankov,PinelopiKoujianouGoldberg,MarieHyland,andEva(Yiwen)Zhang

9DEVELOPINGCOUNTRIESNEEDGREATERFINANCINGANDDEBTRELIEF

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FORCOVID-19ANDFUTUREPANDEMICS

AdnanMazarei

10HERE’SHOWTOGETBILLIONSOFCOVID-19VACCINEDOSESTOTHEWORLD

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ChadP.BownandThomasJ.Bollyky

11HOWTOACCELERATEVACCINEINNOVATIONSTOCOUNTERFUTUREPANDEMICS

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ReinhildeVeugelers

12FORAFAIRERFIGHTAGAINSTPANDEMICS,ENSUREUNIVERSALINTERNET

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ACCESS

MaryE.LovelyandDavidXu

INMEMORYOFRICHARDNEWELLCOOPER,1934–2020

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1Economicpolicyforapandemicage:Anintroduction

MonicadeBolle,MauriceObstfeld,andAdamS.Posen

Ayearago,therewere132,492confirmedcasesofCOVID-19and4,917deathsworldwide,ofwhichtheUnitedStatesaccountedfor1,586confirmedcasesand43deaths.Now,globalconfirmedcasesstandatabout125million—nearlyaquarterofthemintheUnitedStates—andglobaldeathsareapproaching3million—aboutone-fifthofthoseintheUnitedStates.1The

worldlost

8.3percentofayear’scombinedincome

,withthedistributionofeconomiclossesmappinglargelytowheretheinfectionwasleastcontrolled,andthepoorest

ineachcountrysufferingthemostforthefailuresoftheGroupofTwenty(G20)2governments.

AsCOVID-19becameapandemicandtheworldeconomyplummetedinApril2020,wepublisheda

PIIEBriefing

aheadofthemeetingoftheG20FinanceMinistersandCentralBankGovernors.Wewarnedthat“Despite...distrustamongG20governments,significantself-harmwillresultifmutualsuspiciondominatescountries’actions.Putsimply,intheCOVID-19pandemic,lackofinternationalcooperationwillmeanthatmorepeoplewilldie,notjustinthedevelopingworld,andmanymoreotherwiseviablebusinessesandjobswillnotsurvive.”Theworld’sinadequatecollectiveresponsetotheworstpandemicinacenturyhastragicallydeliveredonthatwarning.

Theglobalcommunitycouldhavesavedlivesandlivelihoodshaditpursuedamorecooperativeapproach,anapproachrecognizinghowapathogenthatspillsovernationalborderscannotbedefeatedbynationalactionalone.Instead,theUSadministrationchosetowithdrawfromtheWorldHealthOrganization(WHO),whileexportrestrictionsonkeymedicalsuppliesimposedbyalmostallG20governmentsdisruptedglobalsupplychainsandimperiledallnations’pandemicresponses.Strongcooperationininternationalmonetarypolicyandcommonambitionsinfiscalpolicyin2020wereahelpfulcounterpointshowinghoweffectiveinternationalcoordinationcananddoeshelpmaterially—andjusthowcostlythefailurestocooperateonpublichealth,trade,andemergencydevelopmentaidwere.

Wepointthisoutnottodrawtheoreticallessonsforsomeunspecifiedfuturesimilaroutbreak.TheglobalhealthandeconomicthreatsfromtheCOVID-19

MonicadeBolle

,seniorfellowatthePetersonInstituteforInternationalEconomics,isadjunctlecturerandformerdirectorforLatinAmericanstudiesandemergingmarketsattheSchoolofAdvancedInternationalStudiesatJohnsHopkinsUniversity.

MauriceObstfeld

,nonresidentseniorfellowatthePetersonInstituteforInternationalEconomics,istheClassof1958ProfessorofEconomicsattheUniversityofCalifornia,Berkeley.HewaschiefeconomistoftheInternationalMonetaryFundfrom2015to2018.

AdamS.Posen

isthepresidentofthePetersonInstituteforInternationalEconomics.

DataforayearagoarefromMarch12,2020,thedatewhenanationalemergencywasde-claredintheUnitedStates.See

OurWorldinData

(accessedonMarch26,2021).TheUSpopu-lationisonly4.25percentoftheworld’spopulation.Thedisproportionateshareofpandemic-relateddeathsintheUnitedStatesandWesternEuropecomparedwithotherhigh-incomecountries,despitetheirstrongstartingpointintermsofmedicalresources,demonstratesjusthowimportantpolicydecisionsandcooperationareinsuchacrisis.

ThemembersoftheG20areArgentina,Australia,Brazil,Canada,China,theEuropeanUnion,France,Germany,Japan,India,Indonesia,Italy,Korea,Mexico,Russia,SaudiArabia,SouthAf-rica,Turkey,theUnitedKingdom,andtheUnitedStates.

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pandemicarenotyetbehindus.Whilethedevelopmentofmultiplesafeandhighlyeffectivevaccinesinlessthanayeariscauseforhope,severalsignificantdangerstorecoveryofglobalhealthandincomearestillclearandpresent:

NewconcerningvariantsofSARS-CoV-2,thevirusthatcausesCOVID-19,continuetoemergeatanalarmingrateindifferentpartsoftheworld.TheyhaveappearedinBrazil,SouthAfrica,theUnitedKingdom,andtheUnitedStates,andmaystillemergeelsewhere.Althoughthereismuchtolearnaboutthesevariantsofconcern(VOCs),theycanbemoretransmissible,morelethal,andpotentiallyhardertomanagewithexistingvaccinesthanthevariantsthathadbeencirculatingbeforetheirarrival.ItisverylikelythatduetothenatureofSARS-CoV-2,itsadaptationstohumans,andrateofmutations,vaccineswillneedtobeconstantlyupdated.

Atthesametime,vaccinerolloutshavebeenshockinglyinefficienteveninsomerichcountries,whilemuchofthedevelopingworldwaitsinlinebehindthemforvaccinestoarrive.Inthisenvironment,vaccinenationalismandacrimonyamongcountriesareescalating.Yet,thethreatofnewVOCsmeansthatnocountrycanbesafefromSARS-CoV-2untilallhaveachievedahighlevelofvaccinationintheirpopulations.Moreover,periodicrevaccinationsmaycontinuetobenecessary—indefinitelyandessentiallyeverywhere—tocontainasteadystreamofnewVOCs.

Whileeconomicrecoveryinsomehard-hitcountrieshasbeenrapid,inmanyithascomepartlyfromlockdownfatigueasgovernmentsrelaxbusinessrestrictionsandindividualstoleratehigherriskofinfection.Withonlypartialvaccinationachieved,thelikelihoodthatmoreaggressiveVOCsspread—andthatnewonesemerge—increases.

Takentogether,thesedevelopmentsraisetherealpossibilitythatthecurrentpandemicwillpersistatadangerouslevelforyearstocome.Moreover,thethreatoffuturezoonoticorhuman-madepathogenswillonlyriseovertimeintheabsenceofinternationalcooperationtounderstandtheiroriginsandtocorrecttheconditionsthatcreatethem.

ThenewUSadministrationofPresidentJosephR.BidenJr.hasrejoinedtheWHOandarticulatedagreaterappreciationoftheglobalnatureofthestruggleagainstCOVID-19.Thesedevelopmentsarewelcome—although,withtheUnitedStateshavingpurchased

overonebillionvaccinedosesforapopulationof

330million

,itwillhavemorechancesincomingmonthstomatchwordswithactions.Theglobalcommunity,includingtheUnitedStates,though,coulddomuchmoretoavoidthecoordinationfailuresthathavemarredtheworld’sCOVID-19responsesofar,whileputtinginplacepermanentinstitutionalandinfrastructureinvestmentsthatleveragecapacitiesforcounteringthecurrentandlikelyfuturepandemics.TheG20shouldnowundertakeconcreteactionintheseareas.3

ThisPIIEBriefingsetsoutsomekeylessonsofthecurrentresponsetoCOVID-19,alongwithpolicyrecommendationstohelpprepareforthereal

Boththe

GroupofSeven(G7)countries

andalarge

groupofworldleaders

frombothricherandlessprosperouscountrieshavefloatedtheideaofaninternationaltreatyobligatingcountriestocoordinateonthemanyaspectsofglobaldiseaseresponserequiringcooperationandcollectiveaction.TakingupthisproposalwouldbeanobviousfirststepfortheG20.(TheG7countriesareCanada,France,Germany,Italy,Japan,theUnitedKingdom,andtheUnitedStates.)

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possibilityofapandemicage.Theseinnovationsincludemultilateralprojectsaswellascoordinatedactionsbyindividualcountries,allmakingtheworldmoreresilienttoaslowebbofthecurrentpandemicandtofuturepandemics.TheBriefingcovers11policyareasinwhichcooperativeforward-lookingpolicyactionwillmateriallyimproveourchancesoftrulyescapingtoday’splagueandmakingfutureplagueslesscostly.

WHATADIFFERENCEAYEARMAKES

Overthepastyear,countriesthroughouttheworldhavegonethroughmultiplelockdownsandcontrolledtheirbordersinattemptstocontainthespreadofSARS-CoV-2.Successintheseeffortshasvariedwidelyacrosscountriesandregions.Initialhopesforquickanddecisiveglobalcontainmentofthevirus,followedbyanearlyreturntoeconomicnormality,havebeenbitterlydashed.

ThewelcomearrivalofvaccinescoincidedwiththedetectionofnewVOCsatanalarminglyrapidpace.Evenwherepreviousinfectionratesarehigh,thehopeof“herdimmunity”hasbeenshatteredbytherealitythatwhenasubstantialminorityofthepopulationremainssusceptibletoinfection,selectionpressuresmayactuallypromotetheemergenceofmoretransmissible,andpossiblymoredeadly,VOCs.Andthesehaveprovenabletopropagatequicklyacrosstheworld,easilydefyingnationalborders.

Twointroductorychapters,onebyMonicadeBolleandtheotherbyChadP.Bown,MonicadeBolle,andMauriceObstfeld,makethecasethatweshouldpreparenowforachronicCOVID-19pandemic,aswellasforlikelyfuturepandemics.Wemayhaveenteredapandemicage.TheyraiseamainthemeofthisBriefing:thatthepandemicisnotundercontrolanywhereunlessitisundercontroleverywhere.Aglobalthreatrequiresaglobalresponse.Accordingly,theyofferspecificstepsforwhatthatglobalresponseshouldentail,notjustapleaforsolidarity.

Nowherearethepolicyimplicationsofthepandemicagemoreevidentthanintheareaofvaccinedistribution.Ineverypastglobalhealthemergency,affluentcountrieshavebeenfirstinlinetoachievelife-savingmedicaltreatmentsandinnovations,whilethedevelopingworldhaslaggedbadly.Thistimeisnodifferent.TheKaiserFamilyFoundation

reported

inmid-Marchthatwhiletheworldhadproducedenoughvaccinedosestocovermorethanfour-fifthsofadultsglobally,richcountrieshadpurchasedenoughdosestovaccinatetheiradultsmorethantwiceover,whereaspoorercountrieshadpurchasedenoughtocoveronlyaboutathirdofadults.

Domesticpoliticsmaydemandan“usfirst”approachtovaccinedistributionbyrichcountries,butthesciencesaysotherwise,andpoliticalleadersmusthavethecouragetoexplainthefactstotheircitizens.Astarklyunbalancedrolloutofvaccinesacrosstheworldwillprolongthepandemic,toeveryone’sdetriment.

TheG20istherightvenueforcoordinatingmoreaggressiveglobalvaccinedistributiontoemerging-marketanddevelopingeconomies,asitbringstothetablemajorplayerswithsignificantmanufacturingcapability,includingChina,theEuropeanUnion,India,Russia,andtheUnitedStates.Thesecountrieswillneedtomaintainvaccinemanufacturingcapacitypastthepresentdemand,allowingamorerapidresponsetoemergentthreats.TheG20shouldalsohelpcoordinateotheressentialaspectsofglobalhealthresponse,needednow

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andintothefuture,suchassystematicandgeographicallycomprehensivegenomicsurveillance.

Beyondtheseactions,arangeofinvestmentsandreformswouldhavemitigatedthedevastationfromCOVID-19hadtheybeenmadebefore2020.Theirvalueshouldnowbeevidentforaworldinwhichpandemicsarelikelytoremainanenduringthreat.

PREPARETOVACCINATETHEWORLDQUICKLY

Individualswhochoosetobevaccinatednotonlybenefitpersonallybutalsoconferanadditionalexternalbenefitonsociety.Asaresult,themarketpricesonwhichdrugcompaniesbasetheprofitstheyexpectfromvaccinedevelopmentunderestimatesocietalbenefits.ThisdivergencehelpstomotivateindustrialpoliciesliketheUnitedStates’OperationWarpSpeed,whichacceleratedthedevelopmentofsuccessfulvaccinesforCOVID-19.

Agovernment’sperceiveddomesticsocialbenefitfromsubsidizingvaccinedevelopment,however,likewiseunderestimatestheglobalbenefit,becausecontinuingdiseaseabroadcanunderminecontainmenteffortsathome.Thisfurtherdivergencesupportsthecaseforcountriestocooperateincreating

aglobalvaccineinfrastructure,therebyattainingtheirpotentialmutualgainsandavoidingself-defeatingvaccinenationalism.Itisinthejointinterestof

G20countriestoendorsemoreactiveandinstitutionalizedglobalcooperationonvaccines.ThisBriefingoffersseveralideasforhowtodoso.

Intheirchapter,ChadP.BownandThomasJ.BollykyproposeaCOVID-19VaccineInvestmentandTradeAgreement(CVITA)tofacilitatetherapidandefficientdeploymentofglobalresources,forproductionofbothvaccinesandthemanyinputsneededatearlierstagesofthevaccinesupplychain.4Undersuchanagreement,signatorieswouldprovidecentralizedoversightofthevaccinesupplychainwhilesubsidizinginvestmentsintheentireglobalvaccinesupplychain.Theywouldalsopromisetoavoidthetypesofexportrestrictionsonmedicalsuppliesthathavecontinuedtobedeviltheworld’spandemicresponse.Theresultwouldbearesilientsupplychainthatcanbescaleduprapidlywhentheneedarises—akeyelementineffectivelyrespondingtoanydiseaseoutbreak.VaccineswouldbedistributedequitablyamongpartiestotheCVITA,whichwoulddrawfinancialresourcesfromaninvestmentfundsupportedbynationalcontributionsbasedonnationalincome.

Beingabletoscaleupvaccinemanufacturinganddistributionquicklyisonekeyelementinpandemicpreparedness,buttheprocessofdevelopingnewtreatmentsandvaccinesalsoneedstobeaccelerated.ThenewmessengerRNA(mRNA)vaccineplatformsdevelopedinthecurrentpandemicwillbehelpfulagainstfutureviruses,butfurtherchallengeswillsurelyarise.Internationalcooperationintheresearchandinnovationdomaincanhelptoo.Inherchapter,ReinhildeVeugelerssuggeststhatmajorcountriesandregionssetuptheirownimprovedversionsoftheUnitedStates’BiomedicalAdvancedResearchandDevelopmentAuthority(BARDA),linkingthemintoasingleglobalinnovationplatformthatcouldshareknowledge,costs,andrisks.Thisplatformcould

ACVITAwouldbeakeycomponentofthebroaderproposed“internationalpandemictreaty”referencedinfootnote3.

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partnerwithexistingglobalalliancesfordeliveringanddevelopingvaccines,whichwerehamperedintheinitialstageoftheCOVID-19pandemicbylackofUSparticipation.

Thescaleoftheworktobedone,evenatthenationalorregionallevel,isillustratedbyEurope’shaltingvaccinerollout.Beforepluggingintoaglobalframeworkforbiomedicalpreparedness,theEuropeanUnionmustappropriatededicatedjointresourcesforbothscalingupvaccinemanufacturingcapacityquicklyandsupportingvaccinedevelopmentinitsearlystages(seeJacobFunkKirkegaard’schapter).

GUARDAGAINSTINEQUITIESINDISEASEINCIDENCE

Asinwartime,thefightagainstadiseasewillrunmostsmoothlyifgovernmentscandrawoncitizens’trustandasenseofsharedsacrifice.Systematicinequityinhealthoutcomesunderminesboth.Onevitalelementinthepandemicresponse—goingfarbeyondsocialsolidarity—isastrongpublichealthinfrastructure,asstressedbyDavidWilcoxinhischapter.Strongerpublichealthsystemscouldbetteraddresslong-haulCOVID-19consequences,mentalhealthproblemsowingtothepandemic,andtheneedforsystematicongoingtesting,amongotherneeds.Therewouldalsobeglobalbenefits.

Evenwithinrichcountries,thepandemichasexposedsubstantialinequities,includinginthedistributionofvaccines.Inhischapter,Wilcoxdocumentsthat,despitetheUnitedStateshavingarelativelysuccessfulvaccinerolloutintermsofaveragepopulationcoverage,certaindemographicgroupsarelagging,notablyincludingcommunitiesofcolorandimmigrants.Oftenthesepeoplearefront-lineworkers.Partoftheproblemisvaccinehesitancy,whichisrelativelyhigh

inthesehigh-riskcommunitiesbutisreceding—thoughitisevenhigheramongthose,manyofthemwhite,whoareideologicallyinclinedtowarddistrustofgovernmentandgovernmentaction.

OnekeyelementdrivinginequitiesinvaccinedistributionintheUnitedStates—andbyextension,inothercountries—isinternetaccess.Intheirchapter,MaryLovelyandDavidXudocumentnotonlythatfixedresidentialinternetserviceisunevenlyavailableintheUnitedStatesbutalsothatinternetserviceisleastcommonincountieswherehealthvulnerabilitiesarethegreatest.Thisunfortunatecorrelationcompoundshealthrisks,whilealsoworseningnonmedicalaspectsofthepandemic,suchasthechallengesofremoteschooling.Providinguniversalbroadbandaccessisvaluableformanyreasons,butitsabsencecanbeespeciallydestructiveinapandemic.Inthisarea,manycountries,notablytheUnitedStates,needtoredoubletheirefforts.

IntheUnitedStatesandseveralotheradvancedeconomies,includingCanada,Italy,andJapan,thepandemichashadanegativeeffectonwomen’slaborforceparticipation,threatinggainsmadeoverthepastdecades.SimeonDjankov,PinelopiKoujianouGoldberg,MarieHyland,andEvaZhangdocumentthiseffectintheirchapter.Topreventpermanentdetachmentofwomenfromthelaborforceasthecurrentpandemiccontinues,aswellassimilardangersinfuturepandemics,governmentsshouldenhancewomen’sabilitytoworkwhilecaringforchildrenandimplementarangeoflabor-marketprotections.

TheWHO’sInternationalHealthRegulations(IHRs)obligemembersto

developspecifiedcorecapacitiesforhealthemergencies,butmanycountries

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remainoutofcompliance.BetterimplementationrequiresnotonlymonitoringofWHOmembers’capacitiesbutalsosomeprovisionoffinancialassistancefromrichcountries.TheG20shouldcallforstricterimplementationoftheIHRsaswellasforenhancedassistancetolow-incomecountriesthatwishtostrengthentheirhealthsystems.G20membersshouldalsocommittocounterinequitiesthatthepandemichasexacerbatedandworktowardequitabledomesticvaccinedistribution.

MITIGATETHEAGGREGATEECONOMICCOSTSOFPANDEMICS

Nonpharmaceuticalinterventions(NPIs)tocontrolpandemicswillremaincriticaltothepublichealthresponsewhilevaccinesaredevelopedanddistributed,atleastuntilmostpeoplehavebeenvaccinated.Inevitably,theseinterventionsharmtheeconomy,especiallysectorswhereface-to-facecontactisimportant.BigoutputlossesduringtheCOVID-19pandemictestifytotheimportanceofdesigningNPIstominimizecumulativeeconomiclosses,andthefeasibilityofcontainingapathogenatrelativelyloweconomiccostdependsoncapacitiesforearlydetection,rapidquarantineofinfectedindividuals,andwidespreadtesting.Otherwise,lockdownsbecomeinevitable,possiblyinmultiplephases,aswehaveseenintheUnitedStatesandEurope.Thisprospectunderscoresagainthatinapandemicage,publichealthsystemsmustbeuptothechallengesthatsurelywillarise.

ThecomparativelygoodexperienceinEastAsiaandthePacificshowswhatmaybepossible,asMartinChorzempaandTianleiHuangdiscussintheirchapter.Thedenselypopulatedandgloballyconnectedeconomiesintheregionweregenerallyabletoreturnquicklytohighlevelsofeconomicactivitywithoutsacrificingpublichealthobjectives.EveninChina,wherethenovelcoronaviruslikelyoriginated,accomplishedthisfeatafterinitialstumbles.Themainingredientsweregeneralacceptanceofmasking,widespreadtesting,rigorouscontacttracing,systematicquarantineofindividualslikelyinfected,restrictiononinternalmovementandbordercrossing,andclear,consistentcommunicationfrompublicofficials.Notallcomponentsofthisapproachwillbeequallyenforceableinallcountries,assomesocietieswillbemoreaversetoelementsseentolimitcivilliberties.Yet,itwouldbewiseforpolicymakerstheworldovertostudytheEastAsiaandPacificplaybook,understandhowvariouspoliticalsystemsintheregionwereabletomodifyit,andmakeconsciousdecisions—beforethenextpandemicstrikes—abouthowfartheyarewilling

totradeoffpublichealthobjectivesagainstotherconsiderations.Onelessonisthatcommunicationstechnologyislikelytoplayalargeroleinaneffectiveapproach—againunderlyingtheimportanceofdigitalinfrastructureandinternetaccessincombatingthespreadofdisease.

Throughrestrictionsoninternationalmobility,anenduringCOVID-19scenarioislikelytoresultinalong-termincreaseinforeigntradecosts.Thiswillhavenegativeimplicationsforproductivity,asOlivierBlanchardandJeanPisani-Ferrypointoutintheirchapter.Futurelarge-scalepandemicslikelywillalsoresultinmovementrestrictions.ForcountriesthatcannotsufficientlyemulatethesuccessofcountrieslikethoseinEastAsiaandthePacific,recurrentlockdownsmaybecomeafactoflife,inflictinglong-termscarringonworkersanddestroyingbusinesses.Governmentswillneedtodevisemitigatingstrategies.BlanchardandPisani-FerryshowthatinEurope,successivelockdownshavecomewithlower

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costs.Tosomedegreethisreflectslearning,whichwillhelpgovernmentsinthefuture,buttosomeextentalsoitmayreflectagreaterwillingnessovertimetotoleratehigherrisksofcontagioninordertoavoidgreatereconomicpain.

Emerging-marketanddevelopingeconomieshavenotescapedthepandemic,ofcourse,buttheworstconsequencesofcapital-flowreversal—whichseemedlikelyinApril2020—havenotmaterialized,inlargepartowingtohighlyaccommodativemonetarypoliciesbytheFederalReserveandtheEuropeanCentralBank.Thatcouldchangeifthecurrentpandemicendures,withmoreliquidityproblemsarisingforemerging-marketanddevelopingeconomiesandmoreofthoseliquidityproblemsbecomingsolvencyproblemsfortheworst-hitcountries,leadingtoaneedfordebtrestructuring.Inhischapter,AdnanMazarei,arguesthattheglobalfinancialsafetynet,centeredontheInternationalMonetaryFund(IMF),needsstrengtheningtocopewiththethreatoffuturepandemicsandaslowresolutionofthecurrentone.TheIMFshouldreconsiderthecreationofalendinginstrumentspecializedforpandemicsupport.TheIMFcouldalsodeployfurtherresourcestosupportvaccinedistributiontodevelopingcountries,takingadvantageoftheplanned$650billion

allocation

ofspecialdrawingrightsandpossiblegoldsales.Finally,theG20CommonFrameworkfordebtrestructuringwillbemosteffectiveifitrequiresequaltreatmentofallcreditors,includingprivate-sectorcreditorsandChina.

ONLYINTERNATIONALCOOPERATIONCANMANAGETHEPANDEMICAGE

Ayearago,aheadofthefirstG20FinanceMinistersandCentralBankGovernorsmeetingofthepandemic,weofferedanagendaforinternationalcooperationoneconomicandhealthpolicy.Wheretheleadersactedinlinewithourrecommendations,notablyintheinternationalfinancialandfiscalsphere,cooperativepolicyimprovedoutcomesandpreemptedpotentialconflicts.Wheretheleadersfailedeventoattemptsignificantcollectiveaction,notablyinvaccineproductionanddistribution,livesandlivelihoodswereindeedunnecessarilylost.Agreementsontransparentcommonstandardsofbehavior,allgovernmentspullinginthesamedirectionorforswearingthesamebadactionssimultaneously,matter

(ObstfeldandPosen2020)

.

Weneedtoreadythecapacityforeconomicpolicyresponsesinlightofthepotentialrecurrenceandpersistenceofpandemics.Ifthecurrentpandemicnotonlypersistsbutreassertsitshold,or(possiblyand)anotherpandemichitstheworldsoon,thepolicyresponsecouldworsen,absentrepair.Thetradingsystemingeneralandespeciallyinmedicalsuppliesisalreadyfracturedbydistrust.

Fiscalandmonetarypolicyspacewillbeinsufficienttorespondonascalesimilartothatimplementedthist