Veld, Jan in ‘t, (2016), “Public investment stimulus in surplus countries and their Eurozone spillovers”, VoxeEU, 9 September
The spillover effects of a fiscal stimulus in normal times are likely to be small, at best. This column argues, however, that when interest rates are stuck at the zero lower bound and monetary policy does not offset the expansion, public investment in surplus countries could have significant positive GDP spillovers to the rest of the Eurozone. Given current low borrowing costs, the increase in government debt for surplus countries would be modest, while debt ratios in the rest of the Eurozone could be improved.
Relevant Posts
- Rodrik, Dani, (2016), “The Return of Public Investment”, Project Syndicate, 13 January
- Berg, Andrew, Presbitero, Andrea, Felipe Zanna, Luis, (2016), “Public investment efficiency and growth”, Voxeu, 5 January