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In 1873, Walter Bagehot, a prominent businessman in British high society and a journalist who served for 16 years as editor-in-chief of The Economist, wrote a treatise on banking and finance in which he left his most enduring mark on the world. In “Lombard Street: A Description of the Money Market,” he laid out a playbook for policymakers facing an unfolding economic and financial crisis. When up against such a challenge, Bagehot asserted, leaders must enact a policy response that is both swift and large. “By that policy,” he argued, “they allay the panic; by every other policy they intensify it.”
Economic policymakers around the world today find themselves facing an incredible challenge. As the novel coronavirus spreads, governments are swiftly implementing drastic measures to limit the scope of the pandemic, including banning public gatherings, closing national borders and shuttering all non-essential businesses.