This is an invited book chapter to be published in September 2020.
This chapter explains the economic impacts of today’s lockdown policies intuitively, highlighting the channels through which a health crisis evolves into an economic crisis. It also discusses the types of government interventions required and highlights how fiscal constraints may prevent some countries from avoiding the impacts, and how income constraints may cause some groups to suffer a larger share of the burden of the pandemic. The “Great Lockdown”, a play of words used by the International Monetary Fund to describe the current crisis, is of a different nature from the 2007-2008 Global Financial Crisis (GFC), and requires greater international financial cooperation in helping all countries to put an end to the COVID-19’s infection “circuit” as soon as possible.