Title

U.S. Macro Policies and Global Economic Challenges

Published In

East Asian Economic Review

Document Type

Citation

Publication Date

1-19-2021

Abstract

This paper overviews different exit strategies for the U.S. from the debt-overhang, and analyses their implications for emerging markets and global stability. These strategies are discussed in the context of the debates about secular-stagnation versus debt-overhang, the fiscal theory of the price level, the size of fiscal multipliers, prospects for a multipolar currency system, and historical case studies. We conclude that the reallocation of U.S. fiscal efforts towards infrastructure investment aiming at boosting growth, followed by a gradual tax increase, aiming at reaching a modest primary fiscal surplus over time are akin to an upfront investment in greater long-term global stability. Such a trajectory may solidify the viability and credibility of the U.S. dollar as a global anchor, thereby stabilizing Emerging Markets economies and global growth.

Rights

© 2021 NATIONAL BUREAU OF ECONOMIC RESEARCH. ALL RIGHTS RESERVED.

Locate the Document

https://doi.org/10.3386/w28232

DOI

10.3386/w28232

Share

COinS