PK: In both the Great Recession and now there are two classes of ideas we can immediately classify as worthless.

First, anyone who is peddling known zombie ideas like the magical efficacy of tax cuts should be dismissed out of hand.

Second, anyone who is just rolling out their usual ideas without making allowance for the special nature of the situation shouldn't be taken seriously. Back in 2008-10 you had people talking about monetary and fiscal policy as if there weren't an issue with the zero lower bound. Now you have people -- as always, a lot on the right but some on the left -- talking as if this were a garden-variety recession, not a shutdown enforced by social distancing.

In other words, it's only worth listening to people making a real effort to grapple with the novelty of this crisis.

Given that, I actually don't think it's too hard to think through a lot of what's happening. Most of the economy still works the same way as usual, which is to say more or less Keynesian in the short run. We can understand a lot of the unusual stuff just by applying usual behavior rules to an unusual situation: people may be unemployed with businesses losing sales to exotic causes, but their spending decisions will probably be like those of job losers in normal times. A lot of what's going on in financial markets reflects the same kinds of balance-sheet spillovers we saw in 2008-9.

The hard part is quantifying cross-cutting stuff. How important are supply-chain disruptions relative to excess capacity in driving inflation? What are we missing about things driving spending? (Investment-free consumer-only models can be a very useful strategic simplification — hey, I did that to think about the liquidity trap — but they may miss a key factor right now).

But the truth is that among economists who are making good-faith efforts to respond to unusual times, as opposed to saying what they always say, I'm actually seeing a lot of common ground. I don't see battling orthodoxies this time around.

NS: That's good to hear. One final question: How long can we expect the economic fallout from this shock to last? The Spanish Flu, which also led to a lot of social distancing, didn't seem to leave a lasting economic scar on the nation. But the modern economy is very different -- more dependent on delicate supply chains, more reliant on webs of debt and credit, more weighted toward services rather than manufacturing and agriculture. How likely is this to turn into a lost decade? And what policy mistakes might we make that prolong the pain?

PK: I’ve been trying to get a handle on this by looking at recessions over the past 40 years. Until now we’ve had two kinds: 1979-82-type slumps basically caused by tight money and the 2007-09 type caused by private-sector overreach. The first kind was followed by V-shaped “morning in America” recoveries; the second by sluggish recoveries that took a long time to restore full employment.

My take is that the Covid slump is more like 1979-82 than 2007-09: it wasn’t caused by imbalances that will take years to correct. So that would suggest fast recovery once the virus is contained. But some big caveats.