Risks to inequality from premature fiscal austerity

Premature austerity is self-defeating from both a macro and an equity standpoint according to new research from economists working for the IMF.

The authors argue that continued investment in green and digital infrastructure can help to sustain a posit-pandemic recovery. Severe fiscal austerity measures after a pandemic are associated with inequality increases three times greater than expansive fiscal policy. The research analysed evidence from five previous outbreaks (SARS, H1N1, MERS, Ebola, and Zika).

Suggestion for follow-up reading: Pandemics and inequality: A historical overview (October 2020) - this paper argues that inequality and poverty are likely to increase in the aftermath of the Covid-19 crisis.

See also this article (December 2020) published in the Financial Times: How the pandemic is worsening inequality

And this research from Oxfam (January 2021): The Inequality Virus