Finanz und Wirtschaft, December 9, 2020. PDF.

• Economic policy is not about GDP growth. It’s about welfare.
• Externalities are key. Infection externalities don’t go away by calling for responsible behavior. Infection externalities can turn positive.
• Keeping worthy companies or networks alive does not require government intervention, unless capital markets don’t work.
• To judge the right amount of burden sharing is beyond economics. But economics gives some clues: In an ideal world, idiosyncratic risk exposure would be insured while in second best, taxes and subsidies achieve only part of that. The data show that trade-offs between public health and economic activity are less severe than sometimes argued.