This Finance survey examines (a) By issuing inflation-indexed bonds, and thereby providing a long-term real safe asset for pension funds and retirement savers, governments can make a substantial contribution to social welfare; (b) Issuance of inflation-indexed bonds substantially helps government commit to a responsible fiscal and monetary policy
Keyword: fiscal policy
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With
This US survey examines (a) When economic policy-makers are unable to commit credibly in advance to a specific decision rule, they will often follow a poor policy trajectory; (b) Rules-based fiscal policies deliver substantially better outcomes than purely discretionary, on the spot, policy choices.
Amid
This week's US Economic Experts Panel statements:
A) Restoring the top individual federal income tax rate to 39.6% for incomes over $400,000 (from the current 37%) and taxing the capital gains and dividends of taxpayers with income over $1 million at that top rate (instead of the current preferential rate of 20%), with no other associated changes in taxes or spending, would be unlikely to hurt economic growth noticeably.
B) Restoring the top tax rate, removing the preferential rate on capital gains and dividends, and raising the corporate tax rate from 21% to 28%, with no other associated changes in taxes or spending, would be likely to lead to a meaningful sustained reduction in fiscal deficits.
This week’s IGM European Economic Experts Panel statements:
A) Right now, the central focus of fiscal policy should be on temporary measures to provide protection and promote rapid economic recovery rather than trying to advance other objectives, such as reducing debt, tackling climate change or addressing inequality.
B) Cutting taxes on firms (or delaying tax collection) will allow more of them to survive and be more effective than public spending for triggering a rapid economic recovery.
C) European recovery fund disbursements to crisis-hit countries should be primarily in the form of grants rather than loans.
D) European recovery fund disbursements to crisis-hit countries should not be made on condition of commitments to reform by recipients.
This week’s IGM Economic Experts Panel statements:
A) Assuming that additional federal spending were to be structured as in the CARES Act, a substantial further spending program now will ultimately be less costly than a smaller program because it will better help to avoid long-term economic damage and promote a stronger recovery.
B) Having a fiscal rule that increases social spending on programs like unemployment insurance and SNAP based on the conditions of the economy would be an improvement on the discretionary way in which these programs are currently operated.
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