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Laike Yang and Bo Xu

To contain the COVID-19 pandemic, medical products play an important role around the world. This paper studies the relationship between trade and pandemic control by testing the impact of importing medical products from China on COVID-19 cases and deaths. Using a fixed-effects model, we find that there is a significant negative correlation between imports of medical products from China and COVID-19 cases; for every 1 percent increase in protection equipment imported from China, new COVID-19 cases per day drop by 0.24 percent, and COVID-19-related deaths decrease by 0.13 percent in two weeks. The evidence suggests that trade can play a vital role in fighting the pandemic.

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Luiz Fernando de Paula

This paper examines the Brazilian economy during the COVID-19 pandemic and the economic policies implemented in 2020 to address the economic and social crisis. Using primary and secondary sources, the article differs in its analysis from other heterodox approaches according to which state action in response to the pandemic crisis in Brazil was weak and inconsistent. It is argued that counter-cyclical actions, especially those relating to emergency aid, have had a strong counter-cyclical effect on the economy and on reducing poverty and social inequality, even though there was no strategy previously coordinated by the federal government. The article concludes that the poor outlook for the Brazilian economy relates to both the resumption of orthodox policies and the unleashing of a second wave of the COVID-19 pandemic, both contributing to a slow recovery of the Brazilian economy.

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Jan Behringer, Sebastian Gechert, Hansjörg Herr, Jan Priewe, Heike Joebges and Andrew Watt

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Peter Bofinger

A revision of the European Central Bank's (ECB) strategy is urgently needed. For the new strategy, it is important to define the inflation target explicitly in symmetrical terms. Environmental policy objectives can in principle be reconciled with the ECB's mandate as long as they do not conflict with the objective of monetary stability. An essential element of any strategy is a heuristic that makes it relatively easy for the public to monitor whether monetary policy decisions are in line with the mandate. Among the possible heuristics, monetary targeting and the Taylor rule have to be ruled out while ‘inflation targeting’ offers a relatively simple navigation system for monetary policy discussions.

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Daniele Tavani

This paper considers both secular and medium-run trends to argue that the US economy was already vulnerable to shocks before the COVID-19 crisis. Long-run trends have shown a pattern of secular stagnation and increasing inequality since the 1980s, while the economy has displayed hysteresis during the sluggish recovery from the Great Recession. The immediate policy response through the Coronavirus, Relief and Economic Security (CARES) Act highlighted the coordinating role of fiscal policy on the economy, but also showcased limits, especially with regard to the paycheck protection program. The historical trajectory of the US economy before the COVID-19 crisis cast serious doubts on recent cries of ‘overheating’ and inflationary pressures that should supposedly arise from the $1.9 trillion relief package just signed into law by President Biden. Projecting forward to the long run, redistribution policies may provide useful first steps in reversing the trends of rising inequality and declining productivity growth that the US economy has seen over the last few decades.

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Alicia Garcia Herrero

2020 was a terrible year for Asia but for some countries less than for others. Countries recovered divergently with some managing to grow positively notwithstanding the pandemic, namely mainland China, Taiwan, and Vietnam. The rest of Asia had a hard time, facing problems such as current-account deficit, tourism reliance, and limited fiscal and monetary space. This article discusses the unevenness of COVID-19 and the divergent recovery of Asian economies in the post-COVID-19 era.

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Jan Priewe

While the European Union (EU) fiscal rules are suspended in the years 2020–2022, new rules are in the making and might be activated in 2023. If the old rules were used again, massive austerity would be required in the face of the strongly elevated level of public debt and the gap to the 60 per cent debt cap in the EU Treaty. A new proposal is suggested in this article which requires only small changes in the Treaty and/or the Fiscal Compact, but a strong overhaul in secondary law, that is, the Stability and Growth Pact. The key ideas are to use net interest payments, as a share of GDP, as the new metric for defining debt sustainability rather than gross public debt. This would allow the adjustment of the rules to changing monetary environments, especially interest-rate levels, and changing differentials between interest rates and growth rates. This way, much more fiscal space would be generated both for higher-debt and lower-debt member states and the entire euro area.