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Time to deploy the fiscal levers actively and wisely

November 30, 2016

GIC’s 2016 Frederick Heldring awardee, Catherine L. Mann of the OECD, writes:

“The role of fiscal policy has been at the heart of the policy debate since the financial crisis. With the global economy stuck in a low-growth trap and monetary policy overburdened, it is time to re-assess the use of fiscal policy levers.

Government interest payments have fallen sharply as interest rates have declined to very low levels, freeing up cash. In addition, new OECD estimates show that “fiscal space” – the gap between current government debt and levels at which market access would be compromised – have widened since 2014, as lower interest rates have more than offset headwinds from lower potential growth. This creates a window of opportunity.”

Read the full post on the OECD Ecoscope.