Fiscal Policy under Low Interest Rates

Rethinking fiscal and monetary policy in an economic environment of high debt and low interest rates.

Policy makers in advanced economies find themselves in an unusual fiscal environment: debt ratios are historically high, while real interest rates are extremely low. Such a fundamental change, which seems likely to last, calls for a rethinking of the role of fiscal and monetary policy--and this is just what Olivier Blanchard proposes in Fiscal Policy under Low Interest Rates.

There is a wid...