In my last post I noted that the “supply or demand shock” framing for COVID-19 could be useful, but hid important elements – namely even when there is a real shock if we aren’t noticing rising factor prices (eg wages) there is a demand element.

Given current concerns most focus is on the question of how to deal with the consequences of a disaster now – in a way that doesn’t lower productive capacity in the future.  This is a good frame, and the New Zealand discussion has been strong relative to a lot of other countries.

However, even though a lot of the stores are closed now “demand” management is not just about that future – it needs to occur now as well.  As a result, monetary policy does have a role.

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For the last 8 months I have been teaching at a small liberal arts college in Morocco, Al Akhawayn University.  It is located 1600m high in a small town in the Atlas Mountains, about 60 km from Fez. 

Morocco went into full lockdown on Friday March 20 at 6pm, just after the 80^th case was reported. Its reported trajectory has been very similar to that as New Zealand but, after a slow start, the response has been dramatically faster. At the moment there is a ban on all movement in public spaces, schools and universities are closed and education is on-line, non-essential work places are closed, and people have been issued certificates restricting their movement to two shopping trips per week. Borders have been closed for more than a week  – this is for all people, residents and non-residents, in and out. The ban is indefinite, presumably until the government is convinced the threat is controlled. 

I am writing this as the response is clearly different to that in New Zealand, even though both countries are reporting a similar infection experience. You may be interested to know what a preventive lockdown looks like.

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