Any undergraduate student of economics would vouch for the fact that an economy in a recession requires a fiscal stimulus package (or more government spending and lower taxes). Such a stimulus can only be managed if the economy constrains its fiscal spending in times of growth. Restraint on spending in good times would allow the creation of a buffer for a strong fiscal policy response in the event of a downturn. This Keynesian prescription of counter-cyclical fiscal policy is expected to stabilise output of an economy over business cycle dynamics.
Washington, April 19, The International Monetary Fund (IMF) on Wednesday warned that an unexpected rise in the US inflation, resulting from the aggressive fiscal stimulus launched by President Donald Trump, would cause significant global financial tensions forcing central banks around the world to respond firmly.
Washington, June 25 (IANS) The managing director of the International Monetary Fund (IMF), Christine Lagarde, said on Friday that following the vote in favour of Britain's exit, or "Brexit", from the European Union, her organisation will keep watch on the outcome and is "ready to support" member countries in any financial difficulties they might come up against.