Český finanční a účetní časopis 2020(1):41-62 | DOI: 10.18267/j.cfuc.543

Economic policy response to internal and external shocks

Pavel Morda
Pavel Morda; Vysoká škola ekonomická v Praze, Národohospodářská fakulta, katedra hospodářské a sociální politiky, nám. W. Churchilla 1938/4, 130 67 Praha 3

The paper focuses on the reactions of economic policy to external and internal shocks. It refers to the current economic situation caused by the COVID-19 pandemic that generated a combination of internal and external negative economic shock and an unprecedented termination of some sectors or industries. The aim of the paper is to observe the change in economic policy responses over the last decade by comparing a monetary and fiscal policy responses after the outbreak of the global financial crisis in 2008 with the current economic situation. Most of the observed states indicated faster and stronger reactions of economic policy during the COVID-19 pandemic in comparison to the global financial crisis. The change may be explained by the expectation of a larger economic downturn caused by an abnormal negative shock, however a possible transformation in the ability of the economic policy to react should be also considered as a conceivable reason. The dynamics of the responses was observed especially in the case of fiscal policy, which corresponds to the consensus of the authors of the literature.

Keywords: Fiscal Policy; Economic crisis; Monetary Policy
JEL classification: E32, E52, E62

Received: May 20, 2020; Revised: June 8, 2020; Accepted: June 10, 2020; Prepublished online: June 28, 2020; Published: June 29, 2020  Show citation

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Morda, P. (2020). Economic policy response to internal and external shocks. Czech Financial and Accounting Journal, 2020(1), 41-62. doi: 10.18267/j.cfuc.543
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