Arbeitspapier

Fiscal policy after the crisis: What role for fiscal policy in times of crisis, low interest rates and high public debts?

In 2009, just before the full outbreak of the global financial crisis, Olivier Blanchard (2009) published an article giving a favourable appraisal of the state of macroeconomics. He came to this verdict on the basis that, after a long period of fierce theoretical debate, the discipline had converged on a model known as new consensus macroeconomics (NCM). In the models that made up NCM, fiscal policy played no role - or, to be more precise, fiscal policy had to follow a balanced-budget rule, with the task of stabilising an economy over the business cycle entrusted entirely to monetary policy (following a Taylor rule). And in the midst of the global financial crisis, Carmen Reinhart and Kenneth Rogoff (2010) proposed the figure of 90% of GDP as a threshold level for public debt which, if exceeded, would harm economic growth, leaving fiscal austerity as the best way to trigger economic recovery. Only a decade later, the economics profession now appears to have taken a very different view on fiscal policy: in order to cope with the next economic crisis, resulting from the coronavirus pandemic, most economists recommend an active fiscal policy stance and even a huge increase in debt-to-GDP levels. This paper will shed some light on these developments in economic policymaking and explore the future of fiscal policy.

Sprache
Englisch

Erschienen in
Series: ZÖSS Discussion Paper ; No. 92

Klassifikation
Wirtschaft
Fiscal Policy
Fiscal Policies and Behavior of Economic Agents: General
National Deficit; Surplus
Thema
Fiscal policy
public debt
stabilisation policy

Ereignis
Geistige Schöpfung
(wer)
Heise, Arne
Ereignis
Veröffentlichung
(wer)
Universität Hamburg, Zentrum für Ökonomische und Soziologische Studien (ZÖSS)
(wo)
Hamburg
(wann)
2022

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Heise, Arne
  • Universität Hamburg, Zentrum für Ökonomische und Soziologische Studien (ZÖSS)

Entstanden

  • 2022

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