It is a difficult time to be an economic policymaker with all sectors of the economy, from automobiles to hair salons, clamouring for relief in the context of the Covid-19 crisis. Steps announced now have to find the ‘Goldilocks balance’ – do enough to keep viable firms solvent until normalcy returns but not so much that there is rampant moral hazard and targeting failures. The U.S. Paycheck Protection Programme that provides a conditional grant to small businesses, for instance, has consumed more than $650 billion of funding in less than a month while battling criticisms of allocations to big businesses and venture-funded startups.
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