Two shocks linked to the pandemic: What effects on the effectiveness of economic policies?

We believe the COVID pandemic will give rise to two major lasting shocks: A decline in productivity (of labour and capital) as a result of the new health standards; A decline in the supply of financing (credit, bond financing) as a result of the increase in uncertainty and the deterioration in borrowers' situation. The presence of these two shocks implies that: Conventional demand-side (fiscal and monetary) policies are ineffective; Other, more effective economic policies need to be considered: subsidising employment and wages; setting up public loan guarantees; injecting equity capital into companies' balance sheets.