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The role of the state in the post-pandemic world

The state has taken on a much greater role in G7 countries during the pandemic and there is no guarantee that it will relinquish all its new powers when the coronavirus threat fades. The pandemic could accelerate the backlash against capitalism that had begun in many advanced countries in response to the increase in income inequality, with the government playing a bigger role in the economy. In addition, the unprecedented support provided by monetary and fiscal policymakers could make it harder to say no in the future during even run-of-the-mill downturns, eventually prompting a return to higher inflation, which would be exacerbated if governments also sought to control production of strategic goods. This Focus forms part of a series exploring how the coronavirus pandemic will change the global economy. You can find other publications in this series here.

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