fiscal

Pro-cyclical monetary and fiscal policies exacerbate the challenge that lies ahead. Although the world enjoys a synchronized expansion, the Great Financial Crisis may not be truly over until the downside of this business cycle is managed.

Albert Edwards says the Fed will tighten more aggressively. The increase in interest rates will be a stimulant at first. But eventually, the higher rates will catch up with debtors.

Sometimes governments choose to mimic the private sector and amplify the trend in the economy. This is called pro-cyclicality - and in worst case scenarios, it can be quite destabilizing.

With the Fed already on notice about inflation because of “low, low unemployment”, massive amounts of new deficit spending will only move up their timetable. And bond rates will rise as a result.

The short-term solution reached last month to extend the US federal government's funding expires on Thursday.

When defaults begin to rise and the economy begins to slow, we will find out whether deficits really drive rates higher or cause inflation to rise and remain high.

The working economic model in North America and Europe is one in which the central bank and the fiscal agents are working at cross-purposes, with the central bank doing the heavy lifting if stimulus is desired.

While the UK economy did better than predicted in 2016 in the immediate aftermath of the referendum vote on leaving the European Union, growth has since stalled and inflation has risen. Beginning in January, I have been saying that risks…

This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools we should use? And I want to tee up that…

In my most recent posts, I have been saying that bond markets are pricing in secular stagnation scenarios based on how shallow the yield curve is. But secular stagnation is a policy choice. And that is something I thought I should highlight…