Focusing COVID-19 Bailout and Recovery

The novel coronavirus SARS-CoV-2 imposes the most unexpected external economic shock to modern humankind, triggering abrupt consumption and behavior pattern shifts around the world with widespread socio-economic impacts. In order to alleviate unexpected negative fallouts from the crisis, attention to governmental bailouts and recovery packages gained unprecedented momentum. In confronting the crisis, economic bailout and rescue packages should be targeted with attention to three peculiar aspects of our COVID-19 shock era: (1) Abruptly changed economic demand patterns have resulted in economically gaining and losing industries, which widened an unexpected economic performance gap between the finance sector and the real economy. (2) Systemically differing liquidity in the finance sector and the real economy during the crisis implies sector-specific affective fallout propensities. Currently experienced longest-ever low interest rate regimes foster capital flow for innovation in the finance world, while disincentivizing household savings decreases private consumers' resiliency, which exacerbate negative emotional consequences in the real economy with households facing a narrowing of liquidity constraints. (3) Industry-specific inflation patterns as well as urban-versus-rural disposable income differences should be considered in the wake of ambitious bailout and recovery plans when choosing bailout and recovery beneficiaries and targets. The potential focus of bailouts and recovery ranges from urban-local and national to even global and future-oriented beneficiaries, as pursued in public investments on climate stabilization in the Green New Deal or European Green Deal Sustainable Finance Taxonomy