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Lending and the Prisoner's Dilemma
www.thediff.co

Lending and the Prisoner's Dilemma

Plus! Test-and-trace, costs and benefits, life insurance, drugs

Byrne Hobart
Mar 24, 2020
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Lending and the Prisoner's Dilemma
www.thediff.co

There are two schools of thought around rapid macroeconomic intervention to mitigate the impact of Covid-19:

  • Stabilize aggregates like nominal GDP, or

  • Bail out specific borrowers/lenders

The first option is much, much easier to implement. In theory, you could get their entirely by cutting taxes and monetizing the ensuing deficit. But it’s a blunt instrumen…

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