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A case-study oriented analysis of the demand-side policies to reduce cyclical unemployment in the 2008 financial crisis and their potential effectiveness in a post-COVID US economy

Kakade, Ameya and Roongta, Dhruv and Haribalaraman, Shravan (2020): A case-study oriented analysis of the demand-side policies to reduce cyclical unemployment in the 2008 financial crisis and their potential effectiveness in a post-COVID US economy.

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Abstract

The Great Lockdown, a severe pandemic-induced economic recession, has resulted in record-high levels of unemployment, last seen in the 2008 financial crisis. In response to this concern, this paper aims to formulate ideal policies to combat cyclical unemployment in a US economy following the onset of the coronavirus. As several policies have already been implemented, the paper also comments on their potential effectiveness. The Keynesian model is used as a reference, and thus demand-side policies are the central focus. This paper examines the employment-oriented fiscal and monetary policies implemented by the US, UK, Germany, Spain, and Japan during the 2008 financial crisis. It then determines their potential success in the United States, chosen due to its significant impact on the world economy.

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