Enrique Mendoza, Carlos Vegh, Ethan Ilzetzki, 01 October 2009

Economists do not agree on one question crucial to evaluating governments' responses to the crisis: how much stimulus does spending provide? CEPR Policy Insight No.39 examines how the characteristics of an economy impact on the size of fiscal multipliers.

Peter Heller, 18 September 2009

At the Global Economic Symposium in Schleswig-Holstein in September 2009, Peter Heller of Johns Hopkins University spoke at a session on ‘dealing with the new social divides’. Afterwards, he talked to Romesh Vaitilingam about the challenges of restoring sustainable public finances after the fiscal stimulus – and the potential impact on growth in the developing countries and on the ageing populations of the industrial countries.

Carmen Reinhart, Vincent Reinhart, 22 August 2009

Developed economies are implementing massive fiscal stimulus packages. Should emerging economies? This column warns them that fiscal multipliers are not certain, financing budget deficits will not be easy, the risk of default looms, and central bank independence may be eroded.

Max Corden, 19 May 2009

CEPR Policy Insight No.34 takes a close look at the Keynesian theory underlying the policy of fiscal stimulus being undertaken or considered in many countries, led by the US.

Max Corden, 19 May 2009

Conservative critics of fiscal stimulus policies usually criticise such policies because of the public debt burden they create. This column introduces a new CEPR Policy Insight, which takes a close look at the Keynesian theory underlying the policy of fiscal stimulus being undertaken or considered in many countries, led by the US

Keiichiro Kobayashi, 01 April 2009

Bad debt is the root of the crisis. Fiscal stimulus may help economies for a couple of years but once the “painkilling” effect wears off, US and European economies will plunge back into crisis. The crisis won’t be over until the nonperforming assets are off the balance sheets of US and European banks.

Volker Wieland, 31 March 2009

US economic advisers called for aggressive fiscal stimulus, and some support further measures. But many macroeconomists are not so sure. This column analyses fiscal stimulus using a New Keynesian model that exemplifies contemporary academic thinking on the subject. It says that the spending multiplier is much lower than the Obama administration’s estimates – government spending may quickly crowd out private consumption and investment.

Antonio Spilimbergo, Steven Symansky, Olivier Blanchard, Carlo Cottarelli, 12 February 2009

The global crisis demands bold initiatives to i) rescue the financial sector, and ii) boost aggregate demand, with early resolution of financial sector problems being a necessary condition for the stimulus to work. Since monetary policy is at the end of its rope, early, strong, and carefully thought-out fiscal policies are urgently needed. Time and action are of the essence if we are to avoid a contraction larger than any we’ve seen since the 1930s.

Sylvester Eijffinger, 05 February 2009

This column outlines the Netherlands’ economic recovery plans and compares them to those of other EU members. The Dutch and German plans are sound, as they focus on inducing investment rather than assisting consumers and avoid picking winners amongst industries. But their efforts may not be enough, given recession forecasts.

Robert J. Gordon, 30 January 2009

Robert Gordon of Northwestern University talks to Romesh Vaitilingam about the causes and consequences of the economic crisis, the emerging consensus on the need for fiscal stimulus, and the challenge to the schools of thought that have dominated macroeconomics in recent decades. He argues that we will see a return to old-fashioned Keynesian (non-market clearing) analysis in macroeconomic teaching and research. The interview was recorded at the American Economic Association meetings in San Francisco in January 2009.

Alina Carare, Ashoka Mody, Franziska Ohnsorge, 23 January 2009

This column argues that the German fiscal stimulus package is good, but could and should have come earlier. Moreover, it probably should have been bigger, and it definitely ought to have been better designed. The most important and lasting outcome of the package may well be the new government deficit rule, with its binding correction mechanism.

Jonathan Parker, 16 January 2009

Jonathan Parker of Northwestern University talks to Romesh Vaitilingam about the effectiveness of fiscal stimulus measures, beginning with his research on the impact of the US income tax rebates of 2001 and 2008 on household spending. The interview was recorded at the American Economic Association meetings in San Francisco in January 2009.

Daniel Gros, 21 December 2008

Most countries need a fiscal stimulus, but how should it be implemented? This column assesses fiscal policy's potential to increase demand and argues that any meaningful boost must come from transfers to the private sector, not infrastructure investments. Tax cuts will be most effective in countries where households are net borrowers.

Ralf Martin, 10 December 2008

The current crisis offers an opportunity to set the world on the right track for addressing climate change. This column suggests governments should seize this chance to promote pro-environment fiscal stimuli and to embrace future pollution taxes to pay for them.

Wendy Carlin, Andrea Boltho, 26 November 2008

Germany is in better shape than many to weather the financial crisis. But, this column argues, it needs to raise private consumption with a substantial fiscal stimulus and higher real wages, lest it run the risk of slipping into combined stagnation and deflation.

Giancarlo Corsetti, Gernot Müller, 12 November 2008

Governments are crafting fiscal stimulus packages to counter the crisis. This column highlights factors that are crucial in determining the effectiveness of such measures: the financing mix (taxes vs future spending cuts), and accompanying monetary policy. To illustrate the importance of these considerations, simulation results are presented for several stimulus packages.

Barry Eichengreen, Richard Baldwin, 10 November 2008

This column introduces a collection of essays by leading economists from around the world on what the G20 leaders should do this weekend. Four priorities are identified: nations should act quickly to strengthen and coordinate their firefighting responses; they should immediately reinforce the IMF’s ability to fire-fight the crisis as it spreads to emerging markets and vulnerable developing nations; they should 'above all, do no harm'. Finally, they should start 'thinking outside the box' when it comes to long-run fixes.



CEPR Policy Research