Monetary policy acted as a first line of defense against the crisis but conventional measures appear to have reached their limits in many countries. Policy interest rates in many countries--including the U.S., U.K. and Japan--are now close to the zero nominal interest rate floor. Moreover, the implosion of financial systems in many economies has rendered monetary transmission mechanisms far less effective.Assessing the G-20 Stimulus Plans: A Deeper Look - Brookings Institution
Thus, fiscal policy has become essential to kick-start the global recovery or, at a minimum, to prevent global Gross Domestic Product (GDP) from declining further. At the November 2008 G-20 Summit in Washington, DC, the leaders of the G-20 countries promised to “use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability.” How well have countries been doing on this promise?
Monday, March 9, 2009
Assessing the G-20 Stimulus Plans: A Deeper Look - Brookings Institution
Posted by Anthony J. Pennings, PhD at 11:36 AM