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Global financial crisis: The French policy answer in an EU perspective

Author

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  • Catherine Mathieu

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Henri Sterdyniak

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

The 2007-2009 crisis has led to a return of Keynesian analyses and policies. The paper analyses the contradictions between a structural crisis, the implementation at a very large scale of Keynesian policies and the denial to undermine financial capitalism. The crisis has led the French government to endorse French traditional views according to which government actions have a major role. Although stimulus measures have been limited in France, the economy has been less affected than others thanks to the size of its automatic stabilisers and financial and economic archaisms. However the French government has not abandoned the objective of large public expenditure cuts. European authorities have had to admit that public deficits would rise but they have not implemented coordinated stimulus policies. EU countries are still requested to bring their budgetary positions back into balance, independently of economic developments. Yet the rise in public deficits and debts has not generated any rise in long-term interest rates and in inflation expectations. Two main issues remain: can fiscal and monetary policies alone be expected to boost activity if the roots of the crisis lie in structural imbalances? Will fiscal exit strategies be an opportunity for leading classes to cut massively social and public expenditures?
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Suggested Citation

  • Catherine Mathieu & Henri Sterdyniak, 2010. "Global financial crisis: The French policy answer in an EU perspective," SciencePo Working papers Main hal-03414186, HAL.
    • Handle: RePEc:hal:spmain:hal-03414186
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03414186
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    References listed on IDEAS

    as
    1. Mr. Carlo Cottarelli & José Vinãls, 2009. "A Strategy for Renormalizing Fiscal and Monetary Policies in Advanced Economies," IMF Staff Position Notes 2009/022, International Monetary Fund.
    2. Wallis, Kenneth F., 2004. "Comparing empirical models of the euro economy," Economic Modelling, Elsevier, vol. 21(5), pages 735-758, September.
    3. Carlo Cottarelli & José Vinãls, 2009. "A Strategy for Renormalizing Fiscal and Monetary Policies in Advanced Economies," IMF Staff Position Notes 2009/22, International Monetary Fund.
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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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