“Even most of those who had previously argued that monetary policy was the only appropriate counter-cyclical weapon in the policy-makers’ toolkit accepted in 2008-9 that a fiscal stimulus was necessary to prevent the economies of the United States and the United Kingdom spiralling from recession to depression.” So we are assured by Sir Howard Davies in his review in Prospect ofUniversal Man, the recent Keynes’ biography by Richard Davenport-Hines.
True, Keynesian remedies were articulated strongly at the G20 Washington summit in November 2008 and the G20 London summit in April 2009. But Davies’s limiting his reference only to the USA and UK speaks volumes. At the London summit Sarkozy and Merkel organised a separate press conference in which they repudiated further fiscal stimulus.
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