The fact that OECD countries no longer have any countercyclical stabilisation capacity is a serious problem

As the very expansionary monetary policy continues and as public debt ratios are very high, OECD countries have lost all countercyclical stabilisation capacity. This means that the next economic cycles in OECD countries will be more drastic than in the past. This is a problem per se, but may also lead to amplifying effects of recessions : The high expected variability of growth caused by the disappearance of countercyclical policies may discourage companies from investing (to avoid overcapacity in period s of declining activity); The high expected variability of growth – and therefore of household income growth - may lead to considerable precautionary savings (enabling households to smooth their consumption in the future despite fluctuations in their incomes). The disappearance o f countercyclical stabilisation capacity in OECD c ountries may therefore, when it is expected, lead to a depression of the economy through a decline in corporate investment and a rise in the household savings rate.