Coronavirus forces economics profession to leave comfort zone | Mohamed El-Erian

For years there has been a stubborn reluctance to adopt a more multidisciplinary approach

With the coronavirus devastating one economy after another, the economics profession - and thus the analytical underpinnings for sound policymaking and crisis management - is having to play catchup. Of particular concern are the economics of viral contagion, of fear and of "circuit breakers". The more that economic thinking advances to meet changing realities, the better will be the analysis that informs the policy response.

That response is set to be both novel and inevitably costly. Governments and central banks are pursuing unprecedented measures to mitigate the global downturn, lest a now-certain global recession gives way to a depression (already an uncomfortably high risk). As they do, we will likely see a further erosion of the distinction between mainstream economics in advanced economies and in developing economies.

Related: Coronavirus pandemic has delivered the fastest, deepest economic shock in history

The risk that the financial system will reverse-infect the real economy and cause a depression is too big to ignore