OECD forecast for this year and next are now at 2.7 and 3.6 percent versus 3.6 and 5.8 percent. This is a big revision over the last six months. The global economy is not heading in the right direction in spite of the policies that have been chosen by central banks.
Macro research suggests that this is the time for stronger fiscal policy but there does not seem to be a strong appetite for debt financed government spending and the politician have not made a strong case for it. Nevertheless, there is a growing drumbeat from academic macroeconomics that now is the time for more Keynesian economics. We are in a liquidity trap and need to get out through more spending and printing.
Macro research suggests that this is the time for stronger fiscal policy but there does not seem to be a strong appetite for debt financed government spending and the politician have not made a strong case for it. Nevertheless, there is a growing drumbeat from academic macroeconomics that now is the time for more Keynesian economics. We are in a liquidity trap and need to get out through more spending and printing.
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