But too little will be spent, and on the wrong things
to defend yourself with one hand tied behind your back. Yet the euro area’s economy has been repeatedly asked to do just that. Whenever it is taking a beating, it has had to fight back with monetary policy alone. The European Central Bank has cut rates to zero and below, bought bonds by the bucketload and lent super-cheaply to banks. Fiscal policy has been barely used—and has sometimes done more harm than good.
Mr Balboni adds that much of the expected stimulus takes the form of tax cuts and benefit increases. Because people could choose to save rather than spend the extra cash, that lifts the economy less than public investment, which also brings the benefit of increased economic potential.GDP, which on March 6th published gloomy economic forecasts for the euro zone, estimates that if only the countries with scope to loosen policy—eg, Austria and the Netherlands, as well as Germany—spent an extra 0.
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