Giancarlo Corsetti: On the Effectiveness of Fiscal Stimulus 1/4

The video discusses the effectiveness of fiscal stimulus in economics, highlighting its constraints and the role of government. It explores empirical studies on multipliers, emphasizing that their impact varies based on economic conditions. The discussion extends to fiscal policy during financial crises, showing stronger effects in such times. The video also examines sovereign risk and its spillover to the private sector, using models to illustrate policy implications. The content encourages a nuanced understanding of fiscal policy's role in different economic scenarios.

What lessons can be learned from historical fiscal policy responses to crises?

Explain the relationship between sovereign risk and private sector borrowing costs.

What are the potential consequences of procyclical budget cuts during a recession?

How do expectations about the duration of a recession influence fiscal policy decisions?