Francesca Monti's picture
Affiliation: 
Kings College London

Voting history

The Eurozone COVID-19 Crisis: EU Policy Options

Question 2: What is the best mechanism to pay for economic support provided by and to EU member states to combat the COVID-19 crisis?

Answer:
Joint borrowing by member states (e.g. Coronabonds)
Confidence level:
Confident
Comment:
Covid perpetual eurobonds, such as those proposed by Giavazzi and Tabellini (https://voxeu.org/article/covid-perpetual-eurobonds), are, in my opinion, the most effective tool to finance the fiscal measures that should be put in place.

Question 1: What is the total size of funding that you would advocate at the EU level in support of its members to weather the COVID-19 crisis this year?

 

 

Answer:
5-10% of GDP
Confidence level:
Confident
Comment:
The large exogenous shock to the economy caused, throughout Europe and the world, by the pandemic, warrants a large fiscal response with central bank backing. The EU should have joint fiscal instruments as well as joint financial instruments. There are several channels through which this crisis could be amplified, e.g. risks around bank solvency, so interventions to shore up the economy could ultimately be beneficial for all the countries in the EU, not just for the worst hit countries.

Covid-19: Economic Policy Response

Question 3: Which would be the maximal public debt you would be willing to tolerate if used effectively (as in your answers to 1 and 2 above) to support an economic recovery?

Answer:
120% of GDP (e.g. if fiscal support were doubled)
Confidence level:
Not confident
Comment:
There are various examples of G20 countries running these levels of debt. With reasonable growth rates in the future, and assuming that the government could continue to borrow at low rates, a 120% debt-to-GDP ratio could still be sustainable.

Question 2: Which of the following would have the second greatest impact in mitigating the economic effects of the coronavirus economic crisis in the UK?

Answer:
Making unemployment benefits more generous, streamlined, or comprehensive
Confidence level:
Confident
Comment:
The measures should be addressed to help self-employed workers, gig workers and the unemployed, so that they can keep afloat and make good of their financial commitments, even as their revenues dry up.

Question 1: Which of the following would have the greatest impact in mitigating the economic effects of the coronavirus economic crisis?

Answer:
Government transfers to and bailouts of businesses
Confidence level:
Confident
Comment:
The government should step in to address the liquidity shortages that will affect businesses as their revenues drop in the face of this shock. These transfers should be conditional on continuing to pay wages to all employees and contractors.

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