Document Type

Book Review

Publication Date

2022

Abstract

In March 2020, the world faced not only a public health emergency but also one of the most profound shocks to the global economy in the modern era — a shock deeper and broader than any other in eighty years. Never before had virtually all of the world’s economies suffered a contraction at the same time (Tooze, p. 5). Global output decreased by nearly 3.4% in 2020, the largest contraction since the Second World War. The United States saw the largest recorded demand shock in its history (-32.9%), and the unemployment rate peaked around 15% during 2020, higher than at any point during the Great Recession.

In response, the United States, European Union, and dozens of other governments embarked on massive campaigns of economic stimulus. Over a year and a half, the United States Congress spent almost $5 trillion across three major fiscal packages. Just the first of those bills, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), at $2.2 trillion, was already twice the size of the Obama Administration’s principal response to the Great Recession, the American Recovery and Reinvestment Act of 2009. The European Union likewise engaged in massive fiscal stimulus, also outpacing its response to the Global Financial Crisis of 2008 (GFC). For a wide range of nations, this has led to the largest expansion of government spending — and associated fiscal deficits — relative to the economy’s size, since World War II. Indeed, the urgency and scale of the fiscal response to Covid-19 has drawn analogies to war finance, as opposed to more traditional forms of business cycle management.

Disciplines

Administrative Law | Banking and Finance Law | Law

Comments

Law and Macroeconomics: Legal Remedies to Recessions by Yair Listokin, Cambridge, M.A.: Harvard University Press, 2019, pp. 280, $48.00.

Shutdown: How COVID Shook the World's Economy by Adam Tooze, New York, N.Y.: Viking, 2021, pp. xiv, 368, $28.00.

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