This week’s IGM European Economic Experts Panel statements:
A) Severe lockdowns – including closing non-essential businesses and strict limitations on people’s movement – are likely to be better for the economy in the medium term than less aggressive measures.
B) While national governments have responded to the crisis with substantial economic policy measures, a joint euro area fiscal response is still highly desirable.
C) Given the willingness of the European Central Bank to buy sovereign bonds, including Italian bonds, without limits, there is no need for ‘coronabonds’.
Keyword: fiscal policy
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This week’s IGM European Economic Experts Panel statements:
A) Germany's current account surplus is undesirable even from a purely German viewpoint: the country would be better off if, for example, it ran a smaller primary surplus, in turn leading to a smaller current account surplus.
B) The Eurozone would be in better shape if fiscal policy were more expansionary, which would allow monetary policy to be slightly less so.
C) If there is a recession in the Eurozone, it will be essential to have a coordinated fiscal expansion.
This week's IGM Economic Experts Panel statement:
Long run fiscal sustainability in the US will require some combination of cuts in currently promised Medicare, Medicaid and Social Security benefits and/or tax increases that include higher taxes on households with incomes below $250,000.
This week’s IGM Economic Experts Panel statement:
In 10 years, per capita purchasing power in Greece will be higher if — rather than continuing to service its debts over the next decade and complying with the budget rules currently in place — it refuses to accept a continuation of its current troika program and explicitly defaults on its debt held by the official sector.
This week’s IGM Economic Experts Panel statements:
A: Because of the American Recovery and Reinvestment Act of 2009, the U.S. unemployment rate was lower at the end of 2010 than it would have been without the stimulus bill. (The experts panel previously voted on this question on February 15, 2012. Those earlier results can be found here.)
B: Taking into account all of the ARRA’s economic consequences — including the economic costs of raising taxes to pay for the spending, its effects on future spending, and any other likely future effects — the benefits of the stimulus will end up exceeding its costs.
This week’s IGM Economic Experts Panel statements:
A: If the United States fails to make scheduled interest or principal payments on government debt securities, even as an unintended consequence of political brinksmanship, US families and businesses are likely to suffer severe economic harm.
B: With or without a default, current uncertainty over future taxing and spending policies of the US government is likely to depress private investment and hiring by enough to reduce GDP growth by at least a quarter of a percentage point over the next 12 months.
This week’s IGM Economic Experts Panel statement:
Sustained tax and spending policies that boost consumption in ways that reduce the saving rate are likely to lower long-run living standards.
This week’s IGM Economic Experts Panel statement:
Countries that let their debt loads get high risk losing control of their own fiscal sustainability, through an adverse feedback loop in which doubts by lenders lead to higher government bond rates, which in turn make debt problems more severe.
This week’s IGM Economic Experts Panel statement:
Because all federal spending and taxes must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.
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