Since the subprime crisis, the world has been living in a situation of insufficient demand. Will this be corrected or exacerbated by the coronavirus crisis?

Since the subprime crisis, the world has ex ante (b efore equilibrium was achieved) been living in a situation of insufficient demand, due in particular to a sharp rise in private savings. The ex post rebalancing therefore led to a fall in real interest rates. What will happen after the coronavirus crisis? In the short term there will, on the contrary, be excess demand due to the fall in production caused by containment; But after the health crisis, there will probably be: A further increase in private savings and a further decline in private investment, due to the rise in risk aversion and in uncertainty, which would exacerbate the situation of excess demand; But, conversely, a sharp increase in fiscal deficits, due to the stimulus packages and the financing of onshoring. It will be crucial for interest rate forecasting to know which of these two effects (excess private sector savings, increasing fiscal deficits) will prevail. If the increase in fiscal deficits cannot be permanent, the former effect will eventually prevail.