Must Read

PrintPrint EmailEmail ShareShare CiteCite


Brookings: Assessing the G-20 Stimulus Plans: A Deeper Look

Authors: Eswar Prasad, and Isaac Sorkin
March 1, 2009


The financial crisis turned into a broader macroeconomic crisis in the fall of 2008. The world economy has hit a wall since then, with growth plunging in all the major advanced and emerging economies.

Monetary policy acted as a first line of defense against the crisis but conventional measures appear to have reached their limits in many countries. Policy interest rates in many countries--including the U.S., U.K. and Japan--are now close to the zero nominal interest rate floor. Moreover, the implosion of financial systems in many economies has rendered monetary transmission mechanisms far less effective.

Thus, fiscal policy has become essential to kick-start the global recovery or, at a minimum, to prevent global Gross Domestic Product (GDP) from declining further. At the November 2008 G-20 Summit in Washington, DC, the leaders of the G-20 countries promised to "use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability." How well have countries been doing on this promise?

Full Text of Document

More on This Topic

Foreign Affairs Article

The Right Stuff

Author: Byron York

This past January, Republicans in the U.S. House of Representatives held their annual winter retreat at a waterfront resort in Cambridge,...

Foreign Affairs Article

A Woman of the People

Author: Michael Tomasky

Talk of the Republican Party’s internal divisions has become a staple of the American news diet. Battles between the conservative...