The economy in the time of the coronavirus: The different limits of the monetary and fiscal policies

The dramatic coronavirus pandemic will likely have heavy and prolonged recessive effects on the European and international economic systems. A few weeks ago, it still made some sense to forecast an intense but short-term negative systemic shock that would have given way to a rapid and robust macroeconomic recovery (a so-called 'V-shaped crisis'). Today, this perspective is vanishing. The epidemic peaked or will peak in different times in China, a part of Asia, Italy, the rest of the European Union (EU), and the United States; and these phase displacements risk postponing the return to "normality" in the daily life of the major global economic areas at least until the summer of 2020. The consequence of such a prolonged impact suggests a far more threatening 'L-shaped crisis', that is, a phase of drastic fall in the GDPs of the advanced economic areas, followed by long-lasting economic stagnation.