CORONAVIRUS PANDEMIC SHOCK; Contrasting Classical and Keynes Theories

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CORONAVIRUS PANDEMIC SHOCK; Contrasting Classical and Keynes Theories

ABSTRACT:- Theories inform policy decisions in meeting managerial objectives, testing practices as well as forecasting short and long term socio-economic goals. The classical school of thought economists were disapproved by the Great Depression of 1930s with their invisible hand of the self-adjustment of internal market mechanisms in an event of external shocks. Keynes’ macro-economy view point of instability which calls for policy levers has been widely applied in terms of fiscal and monetary policies as well as adaptive measures on mitigating the impact of pandemics such as coronavirus pandemic. Therefore, the central thesis of this paper was to analyze the practicability of the classical theory in light of the Great Depression as well as evaluating the applications of Keynes intervention measures in the emergence of 2019-nCoV pandemic. The desk review data was employed in giving different viewpoints of the two theories as well as the researcher’s personal observations. The paper found out that Keynes principles are widely used with relatively significant results from economic viewpoint of economists and tax experts. Being an explanatory study on the Keynes’ application of tools, the paper recommends carefully chosen interventions in consideration to the nature of pandemic shocks. Kenya became the main country where the monetary and fiscal tools were being examined as the government grapples with the impact of the fast spreading virus to cushion her economy.

Key words:- Coronavirus, Pandemic shock, Classical and Keynes theories.

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