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Scenario analysis, contingency planning, and central bank communications
At the onset of the COVID-19 pandemic last spring, leading economists called for swift policy action to mitigate the economic damage (Baldwin and Weder di Mauro 2020). Major central banks promptly took forceful and unprecedented actions to avoid a financial crisis and sustain the supply of credit. Consequently, while the initial collapse in economic activity was enormous, advanced economies generally exhibited rapid rebounds during the summer and early fall. Nonetheless, the degree of economic uncertainty is still extraordinarily high, reflecting a combination of upside and downside risks to the economic outlook. For ... (full story)