Macroeconomic policies — definition?
Strategies influencing overall economic activity.
Fiscal policy — role?
Uses government spending and taxes to manage demand.
Monetary policy — mechanism?
Central bank adjusts interest rates and money supply.
Green quantitative easing — purpose?
Supports climate goals via asset purchases.
Carbon taxes — function?
Tax on fossil fuels to reduce emissions.
Fiscal expansion during COVID-19 — scale?
Unprecedented government spending worldwide.
High-income countries — fiscal capacity?
Larger due to favorable credit and low interest rates.
OECD Green Recovery Database — purpose?
Tracks green initiatives in fiscal measures.
Fiscal space — definition?
Government’s room to increase spending without instability.
IMF on fiscal space — view?
Capacity to provide resources sustainably.
Modern Money Theory — core idea?
Sovereign currency issuers can always create money.
Monetary sovereignty — significance?
Enables countries to control their currency and policy space.
Godley's fundamental identity — formula?
(S - I) + (T - G) + (M - X) = 0.
Sectoral balances — components?
Private, government, and foreign balances.
Private sector balance — components?
Households, non-financial, and financial corporates.
Twin deficit approach — assumption?
Private balance remains constant; government and foreign balances linked.
Ricardian equivalence — claim?
Private saving offsets government deficits.
Structuralist approach — causality?
Private balance influences government and foreign balances.
Empirical evidence — sectoral balances?
Valid during euro crisis, showing sector shifts.
Fiscal policy during COVID-19 — disparities?
High-income countries expanded more than low-income ones.
Answer 10 questions on Understanding Macroeconomic Policies and Fiscal Space.
1. What is a key characteristic of macroeconomic policies?
2. What was a primary cause of the record levels of government debt during COVID-19?
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