Questions and answers about coronavirus and the UK economy

Prices & interest rates

Is the Covid-19 recession caused by supply or demand factors?

UK GDP is falling sharply in part because firms are less able to produce goods and services, and in part because consumers aren’t spending as much. Which mechanisms are the most important – and why does this matter for policy-makers?

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How has coronavirus affected prices in the supermarket?

The Covid-19 pandemic has led to the closure of cafés and restaurants, a big increase in home working and some people engaged in panic buying. This has fed through to an increase in spending in supermarkets and food retailers – and driven up grocery prices.

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What should we do about price gouging?

The prices of a number of products in short supply during the Covid-19 crisis have risen sharply. Why do we see this practice of ‘price gouging’ in an emergency? Should we care? And what could be done about it?

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What is the size of the fiscal multiplier?

What is likely to be the impact of a government stimulus or austerity plan in response to the coronavirus crisis on the whole economy? That is what is measured by the ‘fiscal multiplier’ – and the evidence indicates that increased public spending has a bigger impact during recessions.

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Quantitative easing and monetary financing: what’s the difference?

In March, the Bank of England’s Monetary Policy Committee restarted the programme of asset purchases known as quantitative easing or QE to provide support for the economy during the coronavirus crisis. How does it work and does it constitute ‘monetary financing’?

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‘Monetary financing’: is it happening and what are the dangers?

Has the Bank of England been ‘printing money’ to pay for government programmes to tackle the economic damage from the coronavirus crisis? No: it is useful to understand the division of responsibilities between fiscal policy and monetary policy – and why it exists.

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How can we measure consumer price inflation in a lockdown?

How can we keep track of consumer prices when visits to shops to collect data are not currently possible, when many items in the ‘shopping basket’ are not being trading – haircuts, restaurant meals and such like – and when patterns of spending have changed so much?

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UKRI Economic and Social Research Council
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