by John Butler, Macro Strategist, Wellington Management
Many parameters will dictate what different countries’ economies look like coming out of their respective lockdowns — from the timing of any vaccine release to how fast containment measures are eased. But one critical element will be the fiscal response.
Given the nature of this shock, how should we judge a good fiscal response? In my view, the nearer the response gets to absorbing all the private-sector losses on to the public-sector balance sheet, the stronger the subsequent recovery can be.
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