The Impact of Covid-19 on the Macro Economy with Special Reference to the USA

In this paper we investigate impacts of the pandemic on the US economy in the aggregate, and on various sectors and types of businesses and groups. Noting the theoretical premises that imply varying responses across country types, the developments in a number of some other countries are also touched upon. It is seen that while the “K” type recovery dominates in almost all countries, this similarity hides some differences. A general fiscal expansion is seen not to provide a lifeline out of them crisis as the recession is a mix of the demand and supply type, and different in a number of aspects from the financial crisis of 2007-09 as well as the oil price shock scenarios of the 1970s. Fiscal policies will have to be tailor-made, and can vary according to country needs, depending on the fiscal health of the country. Monetary expansion seems possible, given the low inflation risk. US monetary expansion can come as a boon to other countries opting for monetary expansion, since the risk for depreciation against the dollar is removed. Policies to help small businesses and disadvantaged groups can also help in boosting aggregate demand, but may not be continued indefinitely into the future as the behaviour patterns of economic agents may be then changed permanently.