Fiscal Policy under Low Interest Rates

Fr. 47.50
ISBN: 978-0-262-54487-0
+ -

Rethinking fiscal and monetary policy in an economic environment of high debt and low interest rates.

Policy makers in advanced economies find themselves in an unusual fiscal environment: debt ratios are historically high, while real interest rates are extremely low. Such a fundamental change, which seems likely to last, calls for a rethinking of the role of fiscal and monetary policy-and this is just what Olivier Blanchard proposes in Fiscal Policy under Low Interest Rates.

There is a wide set of opinions about the direction fiscal policy should take. Some, pointing to the high debt levels, make debt reduction an absolute priority. Others, pointing to the low interest rates, are less worried; they suggest that there is still fiscal space, and, if justified, further increases in debt should not be ruled out. Blanchard argues that low interest rates decrease not only the fiscal costs of debt, but also the welfare costs of debt. At the same time, he shows how low rates decrease the room for maneuver of monetary policy-and thus increase the benefits of using fiscal policy, including deficits and debt, for macroeconomic stabilization. In short, low rates imply lower costs and higher benefits of debt.

Having sketched what optimal policy looks like, Blanchard considers three examples of fiscal policy in action: fiscal consolidation in the wake of the Global Financial Crisis, the large increase in debt in Japan, and the current US fiscal and monetary policy mix. His conclusions hold practical implications for economic and fiscal policy makers, bankers, and politicians around the world.

Rethinking fiscal and monetary policy in an economic environment of high debt and low interest rates.

Policy makers in advanced economies find themselves in an unusual fiscal environment: debt ratios are historically high, while real interest rates are extremely low. Such a fundamental change, which seems likely to last, calls for a rethinking of the role of fiscal and monetary policy-and this is just what Olivier Blanchard proposes in Fiscal Policy under Low Interest Rates.

There is a wide set of opinions about the direction fiscal policy should take. Some, pointing to the high debt levels, make debt reduction an absolute priority. Others, pointing to the low interest rates, are less worried; they suggest that there is still fiscal space, and, if justified, further increases in debt should not be ruled out. Blanchard argues that low interest rates decrease not only the fiscal costs of debt, but also the welfare costs of debt. At the same time, he shows how low rates decrease the room for maneuver of monetary policy-and thus increase the benefits of using fiscal policy, including deficits and debt, for macroeconomic stabilization. In short, low rates imply lower costs and higher benefits of debt.

Having sketched what optimal policy looks like, Blanchard considers three examples of fiscal policy in action: fiscal consolidation in the wake of the Global Financial Crisis, the large increase in debt in Japan, and the current US fiscal and monetary policy mix. His conclusions hold practical implications for economic and fiscal policy makers, bankers, and politicians around the world.

Autor Blanchard, Olivier
Verlag Random House N.Y.
Einband Kartonierter Einband (Kt)
Erscheinungsjahr 2023
Seitenangabe 192 S.
Lieferstatus Noch nicht erschienen, Januar 2023
Ausgabekennzeichen Englisch
Coverlag The MIT Press (Imprint/Brand)

Über den Autor Blanchard, Olivier

OLIVIER BLANCHARD zählt zu den weltweit renommiertesten Makroökonomie-Experten. Er ist Robert M. Solow Professor of Economics emeritus am Massachusetts Institute of Technology (MIT). Er war für mehrere Regierungen und internationale Organisationen tätig. Vom Herbst 2008 bis 2015 war er Chefökonom des Internationalen Währungsfonds (IWF). Seit Oktober 2015 ist er Fellow am Peterson Institute for International Economics in Washington. GERHARD ILLING ist Inhaber des Lehrstuhls für Makroökonomie an der Fakultät für Volkswirtschaftslehre der LMU München. Er ist Mitglied des Ausschusses für Geldtheorie und -politik sowie des Ausschusses für Makroökonomie im Verein für Socialpolitik. Gerhard Illing erweitert die amerikanische Version des Lehrbuchs um europäische und deutsche Perspektiven.

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