( 2020 ), eu budget : agreement on multi - annual ﬁnancial framework for 2021 to 2027 and one - off “ next generation eu ” instrument in response to the coronavirus pandemic, monthly report, august 2020, pp. ( pages ) 78 - 82. 33. delong, j. b. and b. eichengreen ( 1993 ), the marshall plan : history ’ s most successful adjustment program, in : dornbusch, r., w. nolling and r. layard ( editors ), postwar economic reconstruction and lessons for the east today, mit press, cambridge, pp. ( pages ) 189 - 230. 34. eichengreen, b. and m. uzan ( 1992 ), the marshall plan : economic effects and implications for eastern europe and the former ussr, economic policy, vol. ( volume ) 14, pp. ( pages ) 13 - 75 ; delong, j. b. and b. eichengreen ( 1993 ), op. cit. 35. t. sargent ( 2012 ), nobel lecture : united states then, europe now, journal of political economy, vol. ( volume ) 120, no. ( number ) 1, pp. ( pages ) 1 - 40. 36. kissinger, h. a. ( 2015 ), reﬂections on the marshall plan, the harvard gazette, 22 may, https : / / news. harvard. edu / gazette / story / 2015 / 05 / reﬂections - on - the - marshall - plan / https : / / www. bundesbank. de / en / press / speeches / deglobalisation - disrupted - education - and - debt - economic - policy - challenges - following - the - pandemic - 8 … 11 / 11

2 / 11 19 / 10 / 2020 deglobalisation, disrupted education and debt : economic policy challenges following the pandemic | deutsche bundesbank more generally, in order to maintain price stability, monetary policy aims to smooth aggregate demand over time by adjusting interest rates. for example, if a shortfall in aggregate demand were to weigh on the inﬂation outlook, the central bank would cut its policy rate or bring long - term interest rates down by purchasing bonds. however, while this mechanism is helping to stabilise the economy, it cannot, on its own, address the economic dislocations caused by the pandemic shock we have witnessed. as economist michael woodford recently noted : “ while it may well be [UNK] for restaurants or theaters to suspend the supply of their services for a period [ … ], the loss of their normal source of revenue may leave them unable to pay their rent ; loss of rental income may then require the real - estate management companies to dismiss their maintenance [UNK] [ … ] ; the furloughed maintenance [UNK] may be unable to buy food or pay their own rent [ … ], and so on. ” in other words, the sectoral shutdowns have disrupted the ﬂow of payments within the real economy and thereby severely constrained the spending of many businesses and households. monetary policy can only help in those cases where liquidity is scarce or interest rates are too high, but it cannot make up for the loss of income due to payments not made. instead, ﬁscal transfers directly address the fundamental problem at hand, since they substitute for lost income. by modelling such a situation of “ effective demand failure, ” woodford spelled out a key economic rationale for rapid and large - scale ﬁscal support in the current crisis. in practice, policymakers in germany and elsewhere have been particularly concerned about the danger of businesses ’ temporary liquidity shortfalls turning into solvency problems. indeed, a recent study found that, across a sample of advanced economies, many small and medium - sized enterprises could fail during the crisis. assuming impaired access to credit and no government intervention, the estimated bankruptcy rate would double from roughly 9 % to 18 %. [ 4 ] a broad wave of corporate insolvencies would likely destroy a large number of jobs and raise unemployment persistently. while this would scar the overall economy, the resulting burden would not be shared equally. indeed, a disproportionately large number of women and low