The Distributional Effects of Fiscal Consolidation
Ball, Laurence, Furceri, Davide, Leigh, Daniel & Loungani, Prakash. This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The […]
Explaining the global Great Recession
Bacchetta, Philippe. How can we explain the rapid spread of the Great Recession? This column focuses on international co-movements to explain its global nature, developing a model that shows the global panic to be a rational self-fulfilling mechanism and global co-movements to occur even in countries without much economic integration. Perhaps most importantly, the global […]
A step in the dark: unconventional monetary policy after the crisis
Rajan, Raghuram. Two competing narratives of the sources of the crisis, and attendant remedies, are emerging. The first, and the better known diagnosis, is that demand has collapsed because of the high debt build up prior to the crisis. The households (and countries) that were most prone to spend cannot borrow any more. To revive […]