Coping with Covid: fiscal, monetary, labour market, welfare and environmental policy responses

Fiscal, monetary, labour market and social policy responses to the Covid pandemic were highly innovative and contrary to Chicago School economic orthodoxy. Fiscal and monetary stimuli had appeared to work well during the first phase of the GFC, which helps to explain their use on a larger scale during Covid. Each type of regime tailored its policy responses to its known priorities. The Scandinavian social democratic regimes bolstered their active labour market programs, the corporatists shared reduced work time in order to stabilise family incomes and promote social stability. As was true of the other regimes, the liberal regimes broke with economic orthodoxies they normally endorse and temporarily paid employees for not working, and businesses for not producing. It is likely that some innovations - working from home? distance education? - adopted during Covid will be maintained when normal times resume. However, Covid-induced economic stimuli appear to have stoked high inflation, which if it persists and seriously reduces living standards, may lead to greater caution in future crises.