Fiscal Economical Analysis based on pandemic

COVID-19
AVIJIT ROY

AVIJIT ROY Thursday, August 13, 2020

(COVID-19) is an infectious disease caused by a newly discovered coronavirus.
[ CITATION WHO20 \l 1033 ] The spread is that much vicious that WHO declared this
infection as a pandemic. Thousands of peoples are dying and more than a million
peoples are affected by this virus. In today’s date, this situation is considered a global
emergency and many world leaders are spreading awareness about this.
It’s can be said that peoples are intimidating not because of this virus, but because of
the aftermath of this intriguing matter. Such as the economic crisis. As the world
economy enters an unprecedented crisis caused by the COVID-19 pandemic
My whole paper will be focus on the economic crisis of the United States of America.
[ CITATION Bør20 \l 1033 ]
To start with, I want to say something about fiscal. In macroeconomics terminology,
fiscal policy is the use of government revenue collection (taxes or tax cuts) and
expenditure (spending). Which is render the country's economy. The use of government
revenues and expenditures to influence macroeconomic variables developed as a result
of the Great Depression, when the previous system laissez-faire approach which is
used to economic management, became unpopular. Fiscal policy is based on the
theories of the British economist John Maynard Keynes. Keynesian economics
theorized that government changes in the levels of taxation and government spending
influence aggregate the level of economic activity.[ CITATION Kra19 \l 1033 ]
Following that, in terms of coronavirus pandemic, the fiscal of the USA faced a widening
outbreak. On March 24, 2020, the US has claimed the lives of 544 Americans and
infected more than 44,000 persons across all 50 states. Because of this matter, the US
government implemented a number of measures like travel restrictions, social
distancing, declaration of states of emergency, closure of schools, bars, and
restaurants, spreading the awareness of self-neatness, and increased testing numbers.
Because of this virus numbers of sectors are infected. The United Nations projects that
foreign direct investment flows could fall between 5 and 15 percent to their lowest levels
since the 2008-2009 global financial crisis does a formidable impact on their economy.
This prediction emphasizes on the macro level. Now, moving on to the micro-level. The
hardest hit is having right now is the travel-related businesses. Because, to avoid the
prolong mass infection, the authority confines the social consortium. The International
Air Transport Association warns that COVID-19 could elevate between $63 billion and
$113 billion in revenue in 2020.
The United States media and entertainment (M&E) industry is a $703 billion market.
The U.S. M&E market is the largest M&E market in the world. Which is 33% of the
global M&E industry The U.S. M&E industry is expected to reach $804 billion by 2021.
[ CITATION Med18 \l 1033 ] However, because of this recent pandemic state of
affairs, this eminent industry could lose more than 100 billion USD. However, the
accountable authority postponed most of the shootings of those production houses who
are in the middle of making films and TV series. As we can presume from the illustrated
graph that the film and TV industry made most of the revenues in the last year. A good

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example can be, recently Walt Disney claims that only because of this epidemic crisis
they will earn 5 billion lowers in box office sales. There are many more things are yet to
come. Sports events, Hotel business, energy sector, etc. will lose an ample amount of
revenue and evict this tension. The companies will minimize the cost and many
individuals will lose their living hood.
Talking about the living hood, The Effects of COVID-19 on Unemployment is very
rigorous. That’s why the US Government took the number of incentives to mitigate the
problem. Every single day passes by, the situation becoming more and more
dangerous. The lockdown and the ongoing pandemic problem lead many companies on
the spikes of the shutdown. That’s why the unemployment rate increases. The
government of the US assimilates the problem and working on that matter by giving
insurance policy to the unemployment denizens. Following that, the citizens are rushing
towards the social security office. On March 21, the number of weekly U.S. UI
(Unemployment insurance) claims reached nearly 3.3 million. Which is the highest level
ever. Every single week the number of UI claimers is increasing. Which can break the
previous record. [ CITATION Aar20 \l 1033 ]

Figure 1by Aaron Amburgey and Serdar Birinci [ CITATION Aar201 \l 1033 ]

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In the figure, we can see that states with a relatively large share of service sector
employment experienced larger increases in UI claims in the week of March 14. In
addition, it indicates that an additional 1% share of the service sector was associated
with around a 3.5% increase in UI claims. States such as Maryland, Nevada, and
Massachusetts, which each have a large service share of employment, exhibited large
increases in UI claims. Furthermore, states with a particularly low service share of
employment, such as Wyoming, Indiana, and Idaho, tend to have low or even negative
changes to UI claims. Of course, there are exceptions. Washington, for example, has a
low service sector share of employment relative to other states but displayed a large
increase in UI claims. On the other hand, Delaware has a relatively high service sector
share of employment but experienced a decrease in UI claims.
Considering all the aspects, the US federal government took some initiatives at the
macro level. US$8.3 billion Coronavirus Preparedness - Response Supplemental
Appropriations Act and US$104 billion Families First Coronavirus Response Act which
together provides 0.5 percent GDP for health care, sick leave, small business loans,
and international assistance. US$2 trillion (around 10% GDP) which is expect to pass in
Congress in the coming days. [ CITATION Uyi20 \l 1033 ]
This reserve is work like a contingency fund to fight against this economic turmoil. This
aid will also provide support to the Relief, and Economic Security Act provides for
transfers to households, extended unemployment insurance, food assistance,
incentives for firms to maintain employees on the payroll, loans, and grants for
businesses, funding for hospitals and health care infrastructure, transfers to state and
local governments, and deferral of payroll tax obligations.
This emergency situation hampers abroad students to get a scholarship in the US. As
we know, US universities are the best known for research and development. To cover-
up the other things the government relinquished the scholarships and suspended the
student loans for 60 days. This leads to an intense crisis in the education sector.
Federal Reserve also introduced facilities to support the flow of credit.
The facilities are:
(i) Commercial Paper Funding Facility to facilitate the issuance of commercial
paper by companies and municipal issuers;
(ii) Primary Dealer Credit Facility to provide financing to primary dealers
collateralized by a wide range of investment-grade securities;
(iii) Money Market Mutual Fund Liquidity Facility to provide loans to depository
institutions to purchase assets from prime money market funds (covering
highly rated asset-backed commercial paper and municipal debt);
(iv) Primary Market Corporate Credit Facility to purchase new bonds and loans
from companies;
(v) Secondary Market Corporate Credit Facility to provide liquidity for already-
issued corporate bonds;

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 (vi) Term Asset-Backed Securities Loan Facility (TALF) to support the issuance of
asset-backed securities backed by student, auto, credit card, and small
business loans.[ CITATION IMF201 \l 1033 ]

To recapitulate, imitating the global trade with China might lead the US to the verge of
livid business situation. The supply chain, labor crisis, production standard might get
impaired due to this pandemic. However, the fiscal of the US might come in handy to
guzzle up this elusive and incorrigible economic exile. The big challenge can be to
maintain the volatility and mitigate the banquet of the virus to convalesce from the whole
situation.

Works Cited
Aaron Amburgey, S. B. (2020, March 27). Economic Research , Federal Reserve Bank
St.Louis. Retrieved from Economic Synonpses:
https://research.stlouisfed.org/publications/economic-synopses/2020/03/27/the-
effects-of-covid-19-on-unemployment-insurance-claims
Birinci, A. A. (2020, 3 27). "The Effects of COVID-19 on Unemployment Insurance
Claims,. Retrieved from Economic Synopses:
https://research.stlouisfed.org/publications/economic-synopses/2020/03/27/the-
effects-of-covid-19-on-unemployment-insurance-claims
Børge Brende, P. W. (2020, April 3). World Economic forum. Retrieved from
weforum.org: https://www.weforum.org/agenda/2020/04/covid-19-coronavirus-
economic-crisis-great-recession/
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https://www.weforum.org/agenda/2020/04/covid-19-coronavirus-economic-crisis-
great-recession/
I.M.F. (2020, April 23). IMF Policy Tracker. Retrieved from POLICY RESPONSES TO
COVID-19: https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-
COVID-19#top

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IMF. (2020, April 23). IMF policy Tracker. Retrieved from IMF.ORG:
https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19
Kramer, L. (2019, Nov 21). What Is Fiscal Policy? Retrieved from Investopedia:
https://www.investopedia.com/insights/what-is-fiscal-policy/
Media and Entertainment Industry Overview. (2018, January 08). Retrieved from
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telecommunications/articles/media-and-entertainment-industry-outlook-
trends.html
Uyi Akpata, A. S. (2020, April 8). PwC Nigeria’s Webinar. Retrieved from COVID-19:
Economic Implication: https://www.pwc.com/ng/en/assets/pdf/Covid-19-
economic-implictions-webinar-presentation.pdf
WHO. (2020, April 24). WHO COVID-19. Retrieved from www.who.int:
https://www.who.int/health-topics/coronavirus#tab=tab_1