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Nordic Economic Policy Review Number 1 / 2010

Fiscal Consequences of the Crisis

image of Nordic Economic Policy Review Number 1 / 2010

The Nordic Economic Policy Review is published by the Nordic Council of Ministers and addresses policy issues in a way that is useful for informed non-specialists as well as for professional economists. All articles are commissioned from leading professional economists and are subject to peer review prior to publication. The Nordic Economic Policy Review is published twice a year. The journal is distributed free of charge to members of the Nordic economic associations. The easiest way of subscribing to the NEPR is therefore to become a member of one of these associations, i.e., Denmark: Nationaløkonomisk Forening Finland: Taloustieteellinen Yhdistys Norway: Samfunnsøkonomene Sweden: Nationalekonomiska Föreningen For institutional subscriptions, please contact [email protected] Content: Introduction: Fiscal consequences of the crisis - Torben M. Andersen and Steinar Holden. Some lessons for fiscal policy from the financial crisis - Philip R. Lane. Fiscal policy and macroeconomic stability: New evidence and policy implications - Xavier Debrun and Radhicka Kapoor. Fiscal sustainability in the wake of the financial crisis - Torben M. Andersen. Fiscal policy and labor markets at times of public debt - Giuseppe Bertola. Fiscal costs of financial sector support: Measures and implications for fiscal policy - Daehaeng Kim and Manmohan S. Kumar. Monetary implications of the crisis: Dominance at stake - Charles Wyplosz. The Swedish fiscal policy framework - Robert Boije, Albin Kainelainen and Jonas Norlin.

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Introduction: Fiscal consequences of the crisis

In the immediate aftermath of the financial crisis, there were strong calls for a more active fiscal stabilization policy. Although monetary policy turned very expansionary, via conventional and less conventional instruments, this was not sufficient to prevent sharp reductions in output and employment. The automatic fiscal stabilizers were at work, but this was also seen as insufficient to stabilize the economy. Accordingly, many countries undertook discretionary fiscal policy changes to dampen the consequences of the crisis for output and employment.

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