In contrast, for countries with relatively high debt and budget deficits (including France, Japan, Italy, the UK, and the US) the scope for fiscal easing is limited.ĭecisions about an optimal fiscal reaction to downturns depend primarily on the size and effectiveness of automatic stabilisers as well as available fiscal space. A few European economies with relatively low debt have scope to not only let automatic stabilisers operate fully but to also implement discretionary fiscal policy (Boone and Buti 2019). On the fiscal front, fiscal space differs across countries. Unconventional measures may also provide less stimulus as financial conditions have already been very accommodative for an extended period. The room for conventional monetary policy is limited or exhausted, as central banks in advanced economies have been operating at or near the effective zero lower bound since the Global Crisis. ![]() Monetary policy may not be as effective as in the past. This outlook raises the question of how policymakers could effectively accommodate a downturn. ![]() Downside risks to the outlook persist, including risks arising from geopolitical tensions, policy uncertainty, and, more recently, from the outbreak of the coronavirus. Growth is expected to be 2.4% in 2020 – the weakest growth rate since the Global Crisis, despite accommodative financial conditions and signs of easing trade tensions (OECD 2020). ![]() The economic outlook is gloomy in many countries.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |