Will the world economy suffer hysteresis?

My article of the day comes from the BBC and looks at the risks of long-term damage to the world economy as a consequence of the crisis.

When a severe downturn leads to permanent loss of productive capacity, rising economic inactivity and a sharp drop in capital spending, economists say that countries are at risk of hysteresis.

One of the many challenges facing macro policy-makers is to respond sufficiently robustly and quickly to prevent the worst effects of hysteresis and the social costs this creates.

Will the post-pandemic recovery be a sharp V shape or a U or an L? Or perhaps one where the aftershocks of the slump in production and employment continue to reverberate for years to come?

Please read: https://www.bbc.co.uk/news/business-52000219