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The IMF and the new fiscalism : Was there a U-turn

Author

Listed:
  • Brett Fiebiger
  • Marc Lavoie

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, University of Ottawa [Ottawa])

Abstract

In late 2008 a consensus was reached amongst global policymakers that fiscal stimulus was required to counteract the effects of the Great Recession, a view dubbed as the New Fiscalism. Pragmatism triumphed over the stipulations of the New Consensus Macroeconomics which viewed discretionary fiscal actions as an irrelevant tool of counter-cyclical macroeconomic policy (if not altogether detrimental). The partial re-embrace of Keynes was however relatively short-lived, lasting only until early 2010 when fiscal consolidation came to the forefront again, although the merits of fiscal austerity was questioned again when economic recovery did not really materialized in 2012. This paper traces the ups and downs of the debate over the New Fiscalism, especially at the International Monetary Fund, by analysing IMF documents and G20 communiqués. Using fiscal policy as a means to exit the crisis remains contentious even amidst recognition of secular stagnation.

Suggested Citation

  • Brett Fiebiger & Marc Lavoie, 2017. "The IMF and the new fiscalism : Was there a U-turn," Post-Print hal-01435725, HAL.
  • Handle: RePEc:hal:journl:hal-01435725
    Note: View the original document on HAL open archive server: https://hal-univ-paris13.archives-ouvertes.fr/hal-01435725
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    Keywords

    new fiscalism; fiscal consolidation; expansionary austerity; functional finance; sound finance;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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