Public finance and fiscal policy

Focus

  • Using the fiscal levers to escape the low-growth trap

    In the context where public debt has reached high levels in most OECD countries, it is important to assess the extent of countries' fiscal space and the temporary deficit increase they can afford to run. A rethink is needed for how the fiscal policy stance should be evaluated, particularly in the context where very low sovereign interest rates provide more fiscal space.

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  • The effect of the size and mix of public spending on growth and inequality

    The size and mix of public spending can have a considerable effect on growth and inequality. For instance, too large governments tend to reduce growth, unless governments function in a highly effective way. On the other hand, large governments tend to redistribute more, thereby reducing inequality. Also the spending components, such as government investment, family benefits or subsidies matter for growth and inequality. Simulations combining both growth and distributional effects illustrate that most reforms can deliver considerable growth gains and benefit the poor.

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Finance and inclusive growth: How to restore a healthy financial sector that supports long-lasting, inclusive growth?

Over the past 50 years, credit by banks and other institutions to households and businesses has grown three times as fast as economic activity. At these levels, further expansion is likely to slow long-term growth and raise inequality.

Achieving prudent debt targets using fiscal rules

Debt targets can serve as a fiscal policy anchor to ensure the sustainability of fiscal policy and that there is sufficient policy room to cope with adverse shocks. Prudent debt targets provide the commitment tool that re-assures markets and thereby diminishes risk premia and the cost of active fiscal policy.

More reports

Vulnerability of Social Institutions

Choosing fiscal consolidation instruments compatible with growth and equity

Public Spending on Health and Long-Term Care

Less income inequality and more growth - Are they compatible?

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