Fiscal Stimulus and Global Imbalances

 The Federal Reserve 2017 Jackson Hole Symposium had what I found to be two particularly interesting papers.  The Auerback-Gorodnichenko paper "Fiscal Stimulus and Fiscal Sustainability" which finds that fiscal stimulus in a weak economy, even in countries with high debt, can improve fiscal sustainability.  Jason Furman's remarks on the paper with many charts was very good.  For those of us who have long maintained that fiscal stimulus designed to put people to work, improve needed infrastructure, and stimulate growth in the national economy -- not wasteful political favoritism or handouts to large financial institutions and the rich and rentiers --  are necessary to effectively recover from deep economic recessions and depressions, this is a welcome paper.

Menzie Chinn's paper  "The Once and Future Global Imbalances?  Interpreting the Post-Crisis Record" which documents fiscal policy can and has had a noticeable influence on current account balances.  Chinn had additional remarks with graphs.  Maurice Obstfeld, chief economist at the IMF, also provides remarks detailing the differing economic viewpoints on global imbalances and the problems with resolving the debate.

Federal Reserve Chairman Janet Yellen's speech on financial stability was very subdued and reassuring, particularly in her defense of bank regulations, which many have taken as a subtle rebuke of the current Administration's desire to reduce and/or remove regulations on banks, despite the Great Financial Crisis of 2008.

Here are all the papers, speeches, and remarks at the Symposium.

Print Page