Ricardian neutrality is a situation where private sector economic agents react to an increase in the fiscal deficit by saving more, because they expect that the fiscal deficit will have to be corrected in the future. But after the subprime crisis, we instead saw “Ricardian neutrality in reverseâ€: governments (we look at the euro zone, the United States and the world) had to keep large fiscal deficits in place because the private sector savings rate rose in the wake of the crisis. The risk is that we could again see Ricardian neutrality in reverse after the COVID crisis.
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Natixis
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.