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Post-crisis Fiscal Policy$
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Carlo Cottarelli, Philip Gerson, and Abdelhak Senhadji

Print publication date: 2014

Print ISBN-13: 9780262027182

Published to MIT Press Scholarship Online: September 2015

DOI: 10.7551/mitpress/9780262027182.001.0001

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Policy Lessons from the Crisis and the Way Forward

Policy Lessons from the Crisis and the Way Forward

(p.551) 21 Policy Lessons from the Crisis and the Way Forward
Post-crisis Fiscal Policy

Carlo Cottarelli

Philip Gerson

Abdelhak Senhadji

The MIT Press

This book has shown how the global financial crisis of 2007 has reshaped our understanding of the role of fiscal policy while refocusing the attention of the economics profession on fiscal sustainability issues. Had such a focus existed prior to the crisis, many countries might have been better prepared to deal with its impact than has turned out to be the case: fiscal policy, particularly in advanced countries, was far from optimal prior to the crisis due in part to gaps in fiscal frameworks. As a result, the fiscal position in many advanced economies was relatively weak even before the crisis and worsened significantly thereafter, leading to open fiscal crises in some countries and subjecting others to the vagaries of financial market jitters. The crisis has also affected our thinking about the role of fiscal policy in responding to shocks. This concluding chapter reviews some policy lessons from the crisis and outlines directions for the future with regard to fiscal policy, fiscal multipliers, monetary policy, fiscal sustainability, debt ratios, revenues and expenditures, and fiscal consolidation.

Keywords:   financial crisis, fiscal policy, fiscal sustainability, fiscal multipliers, monetary policy, debt ratio, revenues, expenditures, fiscal consolidation

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