How can fiscal policy be growth-promoting and an anchor for macroeconomic stability?

Fiscal policy has proven to be an effective way to stabilize macroeconomic growth and reduce the amplitude of the economic cycle. When used repeatedly, or excessively, however, it can lead to high levels of public debt that can undermine expectations of macroeconomic stability and so reduce or reverse the impact on growth. Getting the balance right is therefore critical in designing an optimal fiscal policy to support long-term growth. In the face of anemic economic growth in the eurozone, combined with a major slowdown in much of the rest of the world, and high levels of European public debt, it is all-important to conduct debates and explore fiscal policy options.

On April 18, the Initiative for Policy Dialogue (IPD) and the Foundation for European Progressive Studies (FEPS), in partnership with the Global Economy and Development program at Brookings, hosted a public discussion on “How can fiscal policy be growth-promoting and an anchor for macroeconomic stability?” An initial panel featured remarks by Joseph Stiglitz, Massimo D’Alema, Jason Furman, Stephanie Kelton, and Ralf Stegner. The panel was chaired and moderated by Brookings Global Vice President Kemal Derviş.