Coronavirus and the need for strong government institutions: defeating the pandemic and reviving economies

Abstract

This paper discusses the importance of government and economic institutions in dealing with economic shocks such as the COVID-19. In attempting to deal with this massive health, social and economic upheaval, governments around the world have been using a variety of social and economic policies. These policies have two aims. First, to reduce the spread of the virus and second to mitigate the economy wide damage that the spread of the virus is causing. The paper describes the initial economic impact of the virus worldwide and on the Australian economy. It also argues that unless a rapid response is made, the likelihood of a world depression is high. The analysis focuses on the importance of government institutions in respond-ing to major economic shocks. It showcases the work of the Treasury of Australia as a model of best practice for the development of economic policies designed to respond to extreme events. The paper concludes by providing a set of economy wide policy responses to tackle the current economic shocks.