It is almost certain that 2020 will be a recession year in every advanced economy. Most affected countries have by now adopted strict lockdown measures. The economic statistics already coming in are abysmal, from unemployment claims to sales in the hospitality sector. It is almost impossible for most people to work or spend as much as they used to. A tree does not bloom in frost, and a frozen economy does not produce income.

Understandably, the first economic policy response was: do something, do it big and do it fast. The IMF lists sizeable emergency policies for more than a hundred countries, almost all adopted in the past few weeks. The first priority of these policies should be to support the health sector, quickly increasing the capacity of beds, staff and ventilators, mobilising the production of the valuable equipment through tax breaks, public purchases or direct government control, and spurring innovation in treatments and vaccines.

Beyond this immediate priority, there are three goals of economic policy now: make the impact of the frost on people’s life less hard, preserve the economy’s productive capacity for when we can unfreeze the economy, and get ready to raise the heat quickly. For each of them, there are different options, each with its virtues and its flaws. Countries have taken different paths in trading these off, often with little discussion on which is best.

To preserve wellbeing, facing a disaster that affects everyone, governments must provide social insurance to help the most vulnerable make it through. A decision facing policymakers could be to either use existing social insurance mechanisms or to give people cash transfers. Most European countries have done the former, expanding unemployment benefits and welfare payments while relaxing eligibility criteria. In the United States, where the safety net is weaker and has more trouble in reaching people, the government will be sending checks directly over the coming month. Cash transfers are not targeted to reach only those who need them, so they become very expensive, while too-generous unemployment benefits encourage more layoffs and quitting than needed.

Another trade-off is whether to make support conditional on someone’s current income, knowing that checking who qualifies takes time and creates bureaucratic hurdles, so that the payments will be slower. Going further than any other country, the UK government is giving the self-employed 80% of their past profits as a cash grant, no matter how their business is doing right now.

The second goal is to have the economy ready to go back to work with a minimal shortfall in productivity when the lockdown period loosens. The fear is that companies that cannot make payments during the freeze will close their doors for good. Afterwards, it will take a long time for the right business to emerge, bringing together the right people to sell the right product in the right market. Some workers who are laid off now will later have trouble finding the same job that suits them and pays well. This re-matching of markets, companies and workers often makes recessions prolonged and painful. It is better to stop businesses failing in the first place, if the lockdown is going to be short-lived.

To keep businesses afloat, almost every country has deferred some, or most, tax payments. That is an effective and simple way for the government to give credit. Other policies involve tough trade-offs. Italy and Spain have enacted a moratorium on many loan repayments. Asking banks that are already fragile to roll over credits risks creating a financial crisis. Central banks have been buying government bonds to keep interest rates down, and have extended credit to banks with no limit and little cost, as well as directly to companies. In doing so, central banks are taking a lot of risk that these many credits will not be paid back. If they do not, history teaches us that the currency they issue is likely to sharply lose its value.

A separate decision is how to reconcile national mandates with an international pandemic. For now, central banks have activated a patched-up network of lending between them (through so-called swap lines), but the network has many holes, leaving many emerging markets at the risk of running out of foreign funding in the coming weeks, as private investors run for the exit.

A harder question is whether giving liquidity to businesses should take the form of credit or grants. Germany has done the former, putting no limits on how much firms can borrow from the state, but the loans must be paid back, even if over many years. Denmark has opted for the latter, paying companies up to 90% of their wage bill, as well as sick leave, rent and other fixed costs. The question is who should ultimately pay for all the money that businesses are getting: is it the ones who receive help now, paying it back over the next few years out of their revenues? Or, rather should all the taxpayers in the country pay for it, especially the future generations who will inherit the exploding public debt? For most countries, the answer lies somewhere in between, since at least some of the credits won’t be repaid. But where exactly in between should it be is a question not just of economics but of intergenerational ethics and justice.

Finally, policymakers must stimulate the economy as soon as we can get back to work. One trade-off for many highly indebted countries is that the surge in spending now might leave no money for public investments for this near future. For all countries, the disruption in the production and supply chains might lead to large increases in prices. Responding to the bottlenecks that arise sector by sector will provide the grounds for targeted industrial policy, while a tempting way to deal with inflation is the imposition of price and wage controls. These policies are sometimes adopted during wartime, and there is a battle today – against a virus – but more often than not these policies lead to economic disaster.

Across all these trade-offs, the urgency of doing something has drawn in the usual ideologues. For them, there are no trade-offs (now or ever). The emergency either requires a huge permanent expansion in the role of the government, or bailouts to failed but politically connected businesses. This is the last trade-off that moderate policymakers face today: to separate the temporary exceptional measures from permanent long-lasting revolutions.

• Ricardo Reis is AW Phillips Professor of Economics at the London School of Economics