Abstract: Nowadays, with the continuous spread of the 2019- nCoV, its impact has gradually exceeded the infectious disease itself, and gradually penetrated into the economic and financial fields, bringing huge damage to the global economics. Therefore, this article focuses on the multi－dimensional economic effects of the epidemic, and introduces supply shocks, demand shocks as well as financial friction to fully characterize the structural impact of the epidemic on the real economy. The main conclusions are as follows: First, this round of epidemic is a typical compound shock transmitted from the real economy to the financial system so that firmly grasping the recovery of the real economy is the core task of stabilizing the current round of eoconomic fluctuations. Second, in terms of the essential attributes of the epidemic shock, it has a typical “strong supply and weak demand” shock effect, which means that in the period of normalization of epidemic prevention and control, the orderly recovery of the supply side is the key to policy regulation. Third, from the perspective of economic and policy portfolio, the “Two-Pillars” model of macro－prudential and monetary policy can generate the greatest policy benefits, which indicates that when dealing with fluctuations during epidemic periods, it is necessary to balance the steady growth of the macro－economy and the risk prevention of the financial system. Fourth, considering the ripple effect of the epidemic has gradually emerged, China may own a high probability of leading the world recovery, and it will also provide China with important strategic opportunities and strength guarantees for showing responsibility of great power.

Keywords: The Compound Shock of Epidemic; DSGE Model; “Two-Pillars” Policy Regulation; Welfare Loss