Introduction: the transformation of fiscal policy in the turbulent era

Enrique Alberola

Chapter 1 in Fiscal Policy in a Turbulent Era, 2024, pp 1-20 from Edward Elgar Publishing

Abstract: This introductory chapter provides a roadmap to the book with a summary of the chapters. The 20 takeaways - drawn from the contributions - cover the current status of fiscal policy, the challenges and risks ahead and the way forward. In short, the turbulent era has been a good time for fiscal policy. Despite higher debt, loose financial conditions widened the fiscal space that was duly used. The views on fiscal policy have changed substantially; nowadays, it is deemed as more effective and its proactive use is more accepted. The demands and expectations on fiscal policy have increased and probably will not recede. But the situation is fluid amid higher inflation and interest rates. Going forward, the biggest risk is that markets doubt at some point that public debt is sustainable. The fiscal space could then vanish under financial stress and when it is most necessary. A fiscal policy that promotes medium-term consolidation is central to reduce debt, accommodate expanding demands and safeguard the fiscal space.

Keywords: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2024
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