The fading of a temporary demand shock is associated with lower incomes and output, amplifying the transmission of monetary policy through the banking channel. In contrast, the fading out of temporary supply shocks boosts incomes and supply capacity.
indicate that a recession will take hold. The main question is how long the lockdown period will last. If it lasts a long time, each month will see a fall of approximately two percentage points in GDP, according to the OECD calculations. If it lasts for three months, we would see a fall of six percentage points. These are fairly reliable calculations.