Olivier Blanchard and Daniel Leigh’s work on growth forecast errors and fiscal multipliers in 2009-2011 has been highly influential. This column extends their approach to recent years. The authors do not find convincing evidence for stronger-than-expected fiscal multipliers for EU countries during the sovereign debt crisis (2012-2013) or during the tepid recovery thereafter.
Jan Mohlmann, Wim Suyker, 01 December 2015
Willem Buiter, Ebrahim Rahbari, Joe Seydl, 05 June 2015
Stagnation is gripping several of the world’s largest economies and many view this as secular, not transient. This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure investment.
Angus Armstrong, Francesco Caselli, Jagjit Chadha, Wouter den Haan, 14 April 2014
Fears that the financial crisis will have a significant negative impact on long-term UK economic growth are unfounded, according to a majority of the UK macroeconomics profession surveyed by the Centre for Macroeconomics (CFM). What’s more, the inaugural CFM survey, summarised in this column, indicates some optimism about the UK’s immediate capacity for higher growth: while roughly half of the respondents share the views of the Office of Budget Responsibility, the other half is substantially more optimistic about the capacity for the economy to recover.