Dr Ha-Joon Chang - The Consequences of COVID-19

The Oxford Economics society is delighted to host Ha-Joon Chang, Reader in the Political Economy of Development at the University of Cambridge with a research interest in the role of the state in economic change, and author of "Bad Samaritans" and "Kicking Away the Ladder". Dr Ha-Joon Chang will be discussing the consequences of the COVID-19 crisis with some (but not exclusive) focus on developing countries.

[@Achrononmaster]

GDP derives from the national income and account statistics. It does not tell the full supply shock story. The GDP measure can always be addressed by injecting sufficient effective demand, but it has to be wages to get people working on addressing the supply bottlenecks, not a hand out. Once that is realized the recession becomes purely financial, and then Keynes comes into play: there is no purely financial recession that cannot be solved with sufficient effective demand. Governments are single supplier of their tax credit (dollars, yen, renminbi,...)[#] so they have to spend more than they collect back in tax --- if you want a recovery. Period. In an exogenously tax-driven monetary economy there is no other way.
[#] Bank credit (endogenous money) is not net supply, it adds zero to aggregate balance sheets.