The Reality of the Fiscal Stimulus

di Giacomo Saibene

The debate between the so-called Keynesian and anti-Keynesians is still looking for a definitive resolution. On the one hand, Keynesians such as Krugman [1] and Stiglitz [2] argue for further fiscal stimulus. On the other, anti-Keynesians such as Taylor [3] and Greenspan [4] argue for a reduction in governments’ spending and a rebalancing of their fiscal position. Institutions are also involved in the debate: some, such as the International Monetary Fund [5] [6]and the Federal  Reserve [7], argue that this is not the right time to cut governments’ deficits, since recovery is still far from being strong, and that fiscal consolidation should be pursued only later in the future; others, such as the Bank for International Settlement [8] and partly the European Central Bank [9] and [10], appear to be more worried about governments’ deficits and thus call for immediate fiscal tightening.

Continue reading “The Reality of the Fiscal Stimulus”