Economic and financial policymaking tends to move like a pendulum. Euphoria about the potential of government action is usually followed by backlash, disillusion, and lowered ambitions.
“Can-do” rhetoric gives way to “mustn’t-do” restrictions and rules.
After the 2008 global financial crisis, governments initially focused on coordinating fiscal stimulus.
But after 2010, renewed concerns about debt levels set in, and stimulus measures were withdrawn. That subsequent austerity inflicted a substantial economic cost, generating yet another new consensus against “mustn’t-do” rules, and in favor of spending to stimulate the economy.
Harold James Project Syndicate 3 November 2021