Hat tip to the FT Alphaville website for presnting the graph. UBS economists developed a two dimensional grid between monetary policy and fiscal policy to compare country policy behavior combinations. The vertical represents the real rate change while the horizontal gives evidence on fiscal ease as measured by government expenditures relative to GDP.
The graph provides an interesting comparisons of policy because it suggest that while fiscal easing has been greater than average within the US, monetary policy has not lead to as great a fall in real rates as in Europe. Bernanke could do more on this front. by this measure. China, Singapore and South Africa may be the most stimulative countries.
Now, there can be some disagreement on the measurement of the variables but it does suggest that there is wide differentiation between countries especially on the fiscal easing side of the equation.
A combination of relatively tight monetary policy and loose fiscal policy is actually similar to what was seen in the US during the dollar gains of the early 19080's While I would not suggest that current policies are wrong, it does seem like the strong dollar for the recent six months is consistent with the relative policy mix in the US versus other countries.
Now, there can be some disagreement on the measurement of the variables but it does suggest that there is wide differentiation between countries especially on the fiscal easing side of the equation.
A combination of relatively tight monetary policy and loose fiscal policy is actually similar to what was seen in the US during the dollar gains of the early 19080's While I would not suggest that current policies are wrong, it does seem like the strong dollar for the recent six months is consistent with the relative policy mix in the US versus other countries.
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