AVISTA Vladimir Čavrak

Guest Vladimir ČavrakHosted by Gordana GelenčerMay 3, 2026

Vladimir Čavrak

About this episode

What you'll hear in this conversation

When an economic crisis is triggered not by financial collapse or market bubbles, but by a global health emergency, the usual playbooks fall short. Professor Vladimir Čavrak from the Faculty of Economics in Zagreb examines why the COVID-19 downturn is fundamentally different from any before it – a rapid, global shock to both supply and demand, compounded by a collapse in expectations. He argues that this moment demands a departure from outdated debates about the state versus the market, and a more nuanced understanding of how to restart an economy that has been abruptly paused. This conversation will challenge what you thought you knew about crisis response, pushing you to consider the unseen forces that keep an economy running, and the limits of government intervention.

Insights from the conversation

What to take from this episode

The COVID-19 crisis is the first in history not to originate within the economic system itself, but from an external health shock. When the cause of a downturn isn't economic, the standard solutions for market or financial failures will not suffice.

This crisis combines an unprecedented supply shock from halted production, a demand shock from rising unemployment, and a third, often overlooked, shock: the collapse of expectations driven by fear. Any effective response must address all three simultaneously, or risk treating symptoms instead of the whole ailment.

The debate between state intervention and market-led austerity, which dominates public discourse, was abandoned by serious economists three decades ago. You're not choosing between a good market and a bad state; you're looking for solutions that draw from the strengths of both to solve real-world problems.

Stopping an economy is not like pausing a video game where you can simply click 'play' and continue. When production halts, supply chains break, and consumer behavior shifts, restarting requires far more than just lifting restrictions; it demands active measures to rebuild demand and secure new orders.

Focusing solely on preserving jobs and wages, as the government initially did, misses a critical point: if businesses themselves cannot function or secure new orders, those jobs will eventually disappear. The first priority in a supply-side shock must be to ensure the operational viability of enterprises, not just their payrolls.

While state intervention is essential to bridge the immediate gaps left by market failure, it must be temporary and specifically targeted. Allowing emergency measures to become permanent risks creating new dependencies and distorting the economy long after the initial crisis has passed.

The economic shock doesn't just delay consumption; it permanently alters it. Many durable goods, from furniture to electronics, may not be purchased at the same rate, or even at all, after a crisis of this magnitude, signaling a lasting shift in consumer priorities and spending habits.

Explore further

ScenariosBusiness challenges CardsEducational cards TimelineTopic evolution