Contemporary Theoretical Debates on Economic Policy: Lessons for the Post-Pandemic Period

Following the Global Financial Crisis of 2007, intense scrutiny on the validity of the mainstream macroeconomic model (New Consensus Macroeconomics) and its economic policy implications emerged in the academic community. The crisis revealed significant flaws in the traditional understanding of economic dynamics, especially regarding financial market regulation and systemic risk management. Additionally, the unprecedented impact of the COVID-19 pandemic on the global economy served as another test for the current macroeconomic paradigm. The pandemic-induced economic crisis exposed vulnerabilities in the global economic system, highlighting deep-rooted inequalities and structural weaknesses. Once again, doubts arose about the applicability of current macroeconomic models in addressing such complex challenges. This paper seeks to assess the ongoing theoretical debate surrounding the effectiveness of economic policies and discuss their implications for the post-pandemic period. It argues that the macroeconomic role of fiscal policy should be respected, not only when economic disorders occur but also in periods of economic stability. However, the risks associated with increased indebtedness in both advanced and emerging economies are linked to fiscal and financial dominance issues, which may escalate in the future. Therefore, this paper contends that economic policymakers should apply the proper economic-policy mix to address the current and future economic challenges.