Fiscal Policy

"5% of GDP budget deficit for 2% GDP growth.... Allo !?!"

Fiscal Policy has been one of the two pillars with also Monetary Policy used to rescue the economy from the GFC and more recently from the Covid pandemic. In essence government budget deficits have been the norm in most developed countries for many years if not decades.

Public spending and budget deficits are meant to shield the economy from temporary slumps but when they become permanent, these deficits transform into public debt and servicing public debts becomes additional debts.

Economists and credit rating agencies deem these trajectories sustainable while budget deficits are not necessarily effective in promoting economic growth and prosperity.

In this section, we analyze the fiscal profiles, their sustainability and what alternative policies are available.

Publications