All Stimulus Roads Lead to China
Now that the “green shoots” of recovery have withered, the debate over fiscal stimulus is back. But, with the US, Europe, and Japan already awash in debt, a further boost to aggregate demand can come from only one place: emerging markets like China.
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BEIJING – Now that the “green shoots” of recovery have withered, the debate over fiscal stimulus is back with a vengeance. In the United States, those who argue for another stimulus package observe that it was always wishful thinking to believe that a $787 billion package could offset a $3 trillion fall in private spending. But unemployment has risen even faster and further than expected. Combine this with the continued fall in housing prices, and it is understandable that consumer spending remains depressed.