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The Case for an Active Fiscal Policy in the Developed World

Author

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  • Angel Ubide

    (Goldman Sachs & Co)

Abstract

In this world of zero interest rates, fiscal policy has to contribute to support aggregate demand. A well-designed expansionary fiscal policy can contribute to better economic outcomes in three ways. First, it could boost potential growth by investing in activities that raise productivity. Second, it could help monetary policy become more effective by increasing the supply of government bonds and raising the equilibrium real interest rate. Third, it would help reduce income inequality.

Suggested Citation

  • Angel Ubide, 2016. "The Case for an Active Fiscal Policy in the Developed World," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 51(3), pages 158-160, July.
    • Handle: RePEc:pal:buseco:v:51:y:2016:i:3:d:10.1057_s11369-016-0006-0
    DOI: 10.1057/s11369-016-0006-0
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    References listed on IDEAS

    as
    1. Angel Ubide, 2015. "Stability Bonds for the Euro Area," Policy Briefs PB15-19, Peterson Institute for International Economics.
    2. Jacob Funk Kirkegaard, 2015. "Toward a European Migration and Mobility Union," Policy Briefs PB15-23, Peterson Institute for International Economics.
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    Cited by:

    1. van Riet, Ad, 2017. "Monetary Policy Stretched to the Limit: How Could Governments Support the European Central Bank?," MPRA Paper 83451, University Library of Munich, Germany.
    2. Gautam Negi, 2021. "Fiscal Impulse And Sectoral Output €“ Evidence From Indian States," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 28, pages 151-167, December.

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