All that is different about this crisis

The characteristics of the COVID crisis differ from previous crises. It is important to be aware of these differences to properly analyse this crisis and the economic policy responses to it. Unlike usual crises, the COVID crisis: Stems from a negative supply shock , and the supply-side problems will linger, whereas previous crises stemmed from demand shocks; Is having a drastic effect on some emerging countries; Will set in motion a massive shift in the sectoral structure of the economy and in jobs, and will lead to heightened inequalities, some of which will be new; Has led to an extreme economic policy response: considerable fiscal deficits are being fully monetised (the first-ever application of modern monetary theory); the cost of the crisis (asset price bubbles) will therefore differ hugely to that of past crises; Has amplified a number of debates on structural questions: sovereignty and offshoring; the climate and the environment; the functioning of capitalism (even if the crisis bears no real relation with these questions); Has important political and geopolitical ramifications: “cold war” between the United States and China on the one hand; mutualisation of the recovery plan in Europe on the other hand . The shock is therefore much greater than the one after the subprime crisis, which merely led to more stringent financial regulation s .