Report
Should the economic policy conducted in the United States in the recent period be imitated?
The economic policy conducted in the United States in the recent period has applied the "overheating theory": continuing to boost demand through an increasingly expansionary fiscal and monetary policy which remains expansionary late in the cycle when the economy returns to full employment. This economic policy has led to: A rise in the employment rate and the participation rate; Greater productivity growth; and it has therefore actually extended growth. But we should not forget its dangers: The risk of a belated and pronounced rise in interest rates, with the resul ting negative effects on credit and asset prices, and the danger that inflation may return while it seemed to have disappeared; The United States ’ dependence on its ability to continue to attract foreign capital, as the fiscal deficit at full employment will inevitably lead to the appearance of a high external deficit; The fact that this policy allows time for asset prices bubble (equities, real estate) to resurface .
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Natixis
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Patrick Artus
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