December 18, 2020 Articles

Government Purchasing During COVID-19 and Recessions: How Expansionary Legal Policies Can Stimulate the Economy

Désirée U. Klingler

Abstract

The traditional approaches to “cure” economic recessions are monetary and fiscal policies. Most economic crises are first addressed with monetary instruments, as the Federal Reserve’s extensive corporate bond purchasing program of March 24, 2020, has shown.1 However, when interest rates are zero or close to zero—referred to as the zero-lower bound—and the economic downturn is expected to be significant, governments often launch additional fiscal stimulus programs, such as the U.S. COVID-19 Stimulus Package in the amount of $2.2 trillion passed by Congress on March 27, 2020.2 But monetary and fiscal policies are not the only means of influencing an economy’s business cycle. A third and novel option is expansionary legal policies, also referred to as countercyclical regulation, which is the focus of this article.

The COVID-19 pandemic has had drastic impacts on the global economic landscape and exemplified the importance of government procurement.

The COVID-19 pandemic has had drastic impacts on the global economic landscape and exemplified the importance of government procurement.

Kiyoshi Hijiki // Moment // Getty Images

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