A Golden Era for Fiscal Policy
- By Sam van de Schootbrugge
- 7 min read
Summary
• The UK chancellor’s government spending outlay announced in October was unexpected, but that may be due to academic discoveries in recent years.
• Pioneering research highlights the large pro-growth benefits of spending policies in low growth and low interest rate environments.
• It also shows these policies decrease income inequality. Alongside higher growth, this could be a political advantage entering the next election.
Introduction
UK Chancellor Rishi Sunak surprised many with a larger-than-anticipated government spending stimulus in the Autumn Budget. This could signal a mindset change among policymakers. If not now, when? With subpar growth for a decade, a low cost of borrowing and the prospect of higher inflation, governments may seize this environment to change long-term growth trajectories.
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.