Former White House chief economic advisor Nouriel Roubini discusses the major limits of central-bank-driven fiscal deficits.

Rose Prince

2019-12-25 19:46:00 Wed ET

Former White House chief economic advisor Nouriel Roubini discusses the major limits of central-bank-driven fiscal deficits. The International Monetary Fund (IMF) projects subpar global economic growth due to the recent trifecta of the tentative Sino-U.S. trade agreement, geopolitical energy tension in the middle east, and a cloudy economic outlook for Britain and E.U. in light of soft Brexit trade uncertainty. These primary global tail risks anchor inflation expectations worldwide, so central banks engage in tacit monetary policy coordination in accordance with the tripartite congressional mandate of maximum sustainable employment, price stability, and financial market stabilization.

With greater government bond issuance, central banks can help fund fiscal deficits that manifest in the form of both tax cuts and infrastructure expenditures. Left-wing proponents of Modern Monetary Theory argue that larger permanent fiscal deficits help stimulate economic growth when central banks monetize these fiscal deficits in the absence of runaway inflation and economic slack.

However, Roubini argues that the current monetization of fiscal deficits cannot be a sustainable policy response in the long run. Either the global economy eventually experiences a supply shock due to pervasive shortages of oil and natural gas, or an inflationary shock becomes a major economic disturbance worldwide.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

U.S. federalism and domestic institutional arrangements

Olivia London

2023-12-10 09:23:00 Sunday ET

U.S. federalism and domestic institutional arrangements

U.S. federalism and domestic institutional arrangements A given country is federal when both of its national and sub-national governments exercise separa

+See More

Top 4 U.S. richest people are self-made billionaires: Gates, Buffet, Bloomberg, and Zuckerberg.

Dan Rochefort

2017-08-01 09:40:00 Tuesday ET

Top 4 U.S. richest people are self-made billionaires: Gates, Buffet, Bloomberg, and Zuckerberg.

In American states, all of the Top 4 richest people are self-made billionaires: Bill Gates in Washington, Warren Buffett in Nebraska, Michael Bloomberg in N

+See More

Fundamental value investors find it more difficult to ferret out individual stocks.

James Campbell

2017-06-03 05:35:00 Saturday ET

Fundamental value investors find it more difficult to ferret out individual stocks.

Fundamental value investors, who intend to manage their stock portfolios like Warren Buffett and Peter Lynch, now find it more difficult to ferret out indiv

+See More

Lucian Bebchuk and Jesse Fried critique that executive pay often cannot help explain the stock return and operational performance of most corporations.

Daisy Harvey

2023-07-28 11:28:00 Friday ET

Lucian Bebchuk and Jesse Fried critique that executive pay often cannot help explain the stock return and operational performance of most corporations.

Lucian Bebchuk and Jesse Fried critique that executive pay often cannot help explain the stock return and operational performance of most U.S. public corpor

+See More

Personal finance and investment author Thomas Corley studies and shares the rich habits of self-made millionaires.

Charlene Vos

2018-03-23 08:26:00 Friday ET

Personal finance and investment author Thomas Corley studies and shares the rich habits of self-made millionaires.

Personal finance and investment author Thomas Corley studies and shares the rich habits of self-made millionaires. Corley has spent 5 years studying the dai

+See More

President Donald Trump releases his plan to slash income taxes for U.S. citizens and corporations.

Jacob Miramar

2017-09-03 10:44:00 Sunday ET

President Donald Trump releases his plan to slash income taxes for U.S. citizens and corporations.

President Donald Trump has released his plan to slash income taxes for U.S. citizens and corporations. The corporate income tax rate will decline from 35% t

+See More