And after three months, the policy of suppression has affected the economy of Peruvian households (more than 70% of the population belongs to an informal labor market). The population is forced to mobilize to work and obtain their low income, which is intended for consumption and not for saving . COVID-19 is a contagious disease that has generated high economic and social costs in the world . In Peru, even with the suppression policy adopted, its impact is negative on both public health and economic activity . The objective of this research is to analyze the dynamics of the behavior of economic activity and COVID-19, as well as to explain the causal relationships and suggest public policy prescriptions for the resilience and reactivation of economic activity in Peru.

The economy might take weeks or a year to transition into the contraction phase. The peak is displayed on a graph as the highest portion of the curve before moving downward. Do not necessarily indicate how hot must food be kept on a steam table to keep food safe periodic business cycles but imply cyclical responses to shocks via multipliers. The extent of these fluctuations depends on the levels of investment, for that determines the level of aggregate output.

Deflation is beneficial to those with assets in cash, and to those who wish to invest or purchase assets or loan money. Bank failures snowballed as desperate bankers called in loans, which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending. Banks built up their capital reserves and made fewer loans, which intensified deflationary pressures.

Quantitative easing involves the central bank buying bonds and other financial assets, shifting the demand curve for these assets to the right. This leads to a rise in the price of the assets and a fall in the interest rates on those assets. We have shown how monetary policy can be used by the central bank to stabilize the economy in a recession. The government could also have played this role by cutting taxes, or by boosting spending. It will estimate a target for the total aggregate demand, Y, to stabilize the economy, based on the labour market equilibrium and the Phillips curve. As we first saw in Unit 10, when inflation is forecast to be higher or lower than this, the central bank can take action to adjust the level of aggregate demand and employment so as to steer the economy toward a 2% target.

As a result, the pressure on domestic value chains has increased, and de-globalization has emerged again. The value chains will have to be restructured after the pandemic to improve the quality and quantity of jobs and ensure sustainable transitions. Infectious diseases are one of the major causes of death responsible for the quarter to one-third of the mortality worldwide. Despite major developments in the pharmaceutical industry, the spread of infectious diseases is rising due to globalization, increased travel and trade, urbanization, populated cities, changes in human behavior, reviving pathogens and improper use of antibiotics . The recent virus outbreak Covid-19 shows that infectious diseases spread easily due to open economies and easily threaten nations’ economic stability.