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Journal number 4 ∘ Vladimer Papava

DOI:  10.36172/EKONOMISTI.2020.XVI.04.Papava

Expended Summary

The paper examines the most pressing problems facing economics in the context of the economic crisis caused by the COVID-19 pandemic. Due to the atypical nature of this crisis, the knowledge accumulated by economic science about the economy under the conditions of a typical crisis or  an atypical economic crisis is in many cases practically unusable, primarily due to the fact that in the context of the COVID-19 pandemic, the economy is a hostage of medicine. Many problems known by economic science both during the course of the noted crisis and in the post-crisis period require new approaches to resolve them.

Key words: economic science, COVID-19 pandemic, coronomic crisis, globalization, de-globalization, zombie-ing of the economy.

The COVID-19 pandemic has triggered a global economic crisis which is a topical subject for the study for economics.

Emphasizing the importance of the economic crisis caused by the COVID-19 pandemic, the term “Coronomics” (by combining the two terms “Corona” and “Economics”) appeared to denote the sub-sector of economic science that should study the impact of the coronavirus pandemic on the economy. Based on this terminological innovation, the economic crisis caused by the COVID-19 pandemic can be qualified as a coronomic crisis.

The purpose of this paper is to discuss the main problems of economic science in the context of the coronomic crisis.

Since the roots of the coronomic crisis are not in the economy itself, and its completion does not depend on the economic measures taken by the government, it can be stated that this crisis is an atypical economic crisis.

Thus, the coronomic crisis is unique in its atypicality and the use of the already accumulated experience in the study of typical and other atypical crises for the purpose of studying it (the coronomic crisis) may not always be justified.

One of the peculiarities of the coronomic crisis is that the economy becomes a hostage of medicine as a result of which anti-crisis measures cannot fundamentally help to overcome the crisis and are aimed exclusively at alleviating the crisis situation of the population and business.

The coronomic crisis has raised doubts about the possibility of a “crisis of globalization” or the process of de-globalization. An analysis of the latter shows that it is a forced de-globalization due to the unforeseen and unexpectedly rapid spread of the coronavirus. Overcoming the pandemic and the economic crisis caused by it is fundamentally impossible without a global approach to solving these problems. In the foreseeable future, countries need to prepare for a new round of the globalization process.

During the coronomic crisis, the role of the government is especially growing. And since there is no guarantee that the COVID-19 pandemic will end soon, and there is also a danger of the appearance of new crises similar to the current one, the increasing role of the government requires special study.

The coronomic crisis has raised the issue of economic security. In this context, it is necessary to use every opportunity to maximize the food security of each country and their regions.

The coronomic crisis and the anti-crisis measures have led to an increase in national budget deficits in many countries as well as an increase in their sovereign debts. Post-crisis measures must necessarily take into account this “unpleasant legacy” of the crisis period.

One of the main results of the coronomiс crisis is a simultaneous reduction in aggregate demand and, to an even greater extent, aggregate supply. In such conditions, controlling the inflation rate by central banks, which use the inflation targeting regime in monetary policy, does not give the desired results. As a consequence, it is necessary to expand the target indicators of central banks used in their monetary policy.

Tax breaks for businesses and the provision of concessional loans to firms ultimately lead to zombie-ing, especially those of them that had problems with solvency even before the onset of the coronomic crisis. In the post-crisis period, it is necessary to have real opportunities to overcome the phenomenon of the zombie-economy.

The list of problems of economic science discussed in this article is only a part of those with which economists will have to deal the foreseeable future.