Fiscal stabilisation policy is redundant, says Bullard


Stabilisation policies should be left to the monetary authority, and not government, as there are considerable doubts over the merits of fiscal stabilisation programmes, according to a paper published by James Bullard, the president of the St Louis Federal Reserve, on January 13.

Bullard uses a new-Keynesian dynamic stochastic general equilibrium model to examine whether fiscal policy is an effective stabilisation tool. He notes that the conventional wisdom pre-2007 was that fiscal policy

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