Talk:Supply shock

Merge

This article should be merged with Shock (economics), since it covers similar material. Geoffrey.landis (talk) 15:32, 30 January 2015 (UTC)

The Covid Pandemic produced an exogenous supply shock rather than a Keynesian supply slump

Dr Oliver Hartwich, chief executive NZ Initiative Hartwich sees a misreading of the extent of the demand shock. “When Covid struck in early 2020, we were all at sea because none of us had ever dealt with this kind of situation before. We did not know what it would be like having your borders closed and the country in lockdown. My gut feeling (and that of most economists) was that it could push the economy off a cliff — a bit like the GFC, perhaps like the Great Depression. However, it became clear by around May 2020 that our situation was nothing like these other events. This was not a Keynesian demand slump. No, with all the supply-chain disruptions and people still working from home, this looked much more like an exogenous supply shock. Now, whether it was a’ Keynesian demand slump or an exogenous supply shock really mattered. Because if it was the former, then - stimulus might have been justified. If it was the latter, stimulus would have made a bad situation worse because the extra stimulus would have encountered a reduced supply and just resulted in higher prices. Well, it turned out that’s exactly what's happened. So while many central banks kept treating it like a normal recession, the administered medicine turned out to be the wrong one.”

Citation WWW.bayofplentytimes.co.nz September 11 2024 ~~ AndrewHart500 (talk) 09:46, 13 September 2024 (UTC)