COVID‐19, trade and trade policy

The 2008–2009 global financial crisis was a once-in-a-century financial shock; COVID-19 has been a once-in-a-century public health shock. Both were largely unexpected; both have had massive economic impacts. A cocktail of factors catalysed the global financial crisis, in particular: low-interest rat...

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Bibliographic Details
Published inWorld economy Vol. 45; no. 2; pp. 338 - 341
Main Authors Greenaway, David, Nelson, Douglas
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.02.2022
Subjects
Banking
Coronaviruses
COVID-19
Derivatives
Economic analysis
Economic crisis
Economic impact
Influenza
Interest rates
International finance
International trade
Memories
Pandemics
Public finance
Public health
Securities
Subprime lending
Trade policy
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Summary:The 2008–2009 global financial crisis was a once-in-a-century financial shock; COVID-19 has been a once-in-a-century public health shock. Both were largely unexpected; both have had massive economic impacts. A cocktail of factors catalysed the global financial crisis, in particular: low-interest rates; boom in subprime lending; the use of derivative assets based on mortgage securities that were treated as essentially riskless in the shadow banking sector. With hindsight, it could be said that the inevitability of a crash ought to have been obvious, and indeed some commentators had the foresight to say just that. But, as Reinhart and Rogoff explain so well in their panoramic view of ‘Eight Centuries of Financial Folly’ those driving financial markets tend to have short memories and discount warning signs because ‘This Time is Different’. The same cannot be said for COVID. Although many public health experts have drawn attention to the possibility (for some, inevitability) of a global pandemic, it tended to be predicated on some kind of influenza outbreak. The emergence of a novel coronavirus as easily transmissible and as deadly as COVID-19 was completely unexpected.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.13238