Asian governments were able to respond more quickly to the COVID-19 pandemic, Chicago Booth’s Randall S. Kroszner explains, because they’ve had more experience with such outbreaks, and so have their citizens.
I think one of the key things that the policy makers have gotten right is, at least in the first stage, to focus on the short term, making sure to get resources out to people as quickly as possible. That is, sending checks out, providing support for the unemployed, trying to maintain jobs, and, on the monetary policy side, to make sure that the financial system continues to function. That’s really crucial because if the financial system seizes up, things aren’t going to go forward.
One of the key challenges that policy makers face is when to act. They get a lot of information in about health, about the economy, about global transmission, but it’s very hard to know when you should act. Now it turns out in this case that acting earlier seems to have had a lot of benefits. But I understand how difficult it is to make those choices quickly.
I think one of the reasons why policy makers in Asia were able to act more quickly is that they had experience with this. You’ve had SARS, you’ve had avian flu, you’ve had a number of pandemics that have affected Asia over the last 10 to 15 years, so there’s much more experience with this, much more understanding of how quickly viruses can spread and also a much greater understanding and a willingness on the part of the populace to change their behavior very significantly when one of these comes along. I think that’s one of the reasons why there was faster action in Asia than there has been in much of the rest of the world.
Also, another challenge has been the lack of data. We haven’t had the detailed data that would be extremely valuable to have had to understand exactly the origins, exactly the growth in China and elsewhere. The data has been very slow to come together, and it’s virtually impossible for policy makers to act unless they have concrete data, and I don’t think we had nearly enough data early on in December, January, and February.
That would have been very helpful for policy makers to go, “Aha! This is super important. We need to act,” rather than, “This is a local thing,” or, “We’re not really sure how large it is.”
The lack of data is a problem, and that’s also going to be a problem in thinking about the exit strategy. If we don’t have the data, it’s going to be very difficult to craft an effective exit strategy.