Over the past five years, the leaders of the Group of 20 major economies have altered their message from endorsing stimulus (November 2008) to calling for “fiscal consolidation” (June 2010) to urging “countries with sufficient fiscal space” to prepare to do more than allow automatic stabilizers, such as unemployment compensation, to widen their deficit (June 2012.).
Excerpts from the fiscal policy sections of their communiqués:
Washington, Nov. 2008
We will…use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability Pittsburgh, Sept. 2009
We will avoid premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility.
Toronto, June 2010
We agreed today on…following through on fiscal stimulus and communicating “growth friendly” fiscal consolidation plans in advanced countries that will be implemented going forward.
Sound fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks, ensure the capacity to meet the challenges of aging populations, and avoid leaving future generations with a legacy of deficits and debt.
The path of adjustment must be carefully calibrated to sustain the recovery in private demand. There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery.
There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth.
Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016.
Seoul, Nov. 2010
The plan includes our commitment to… undertake macroeconomic policies, including fiscal consolidation where necessary
Cannes, Nov. 2011
Taking into account national circumstances, countries where public finances remain strongly commit to let automatic stabilizers work and take discretionary measures to support domestic demand should economic conditions materially worsen.
Los Cabos, June 2012
Advanced economies will ensure that the pace of fiscal consolidation is appropriate to support the recovery, taking country-specific circumstances into account and, in line with the Toronto commitments, address concerns about medium term fiscal sustainability.
Those advanced and emerging economies which have fiscal space will let the automatic fiscal stabilizers to operate taking into account national circumstances and current demand conditions.
Should economic conditions deteriorate significantly further, those countries with sufficient fiscal space stand ready to coordinate and implement discretionary fiscal actions to support domestic demand, as appropriate.
wsj.com
Excerpts from the fiscal policy sections of their communiqués:
Washington, Nov. 2008
We will…use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability Pittsburgh, Sept. 2009
We will avoid premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility.
Toronto, June 2010
We agreed today on…following through on fiscal stimulus and communicating “growth friendly” fiscal consolidation plans in advanced countries that will be implemented going forward.
Sound fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks, ensure the capacity to meet the challenges of aging populations, and avoid leaving future generations with a legacy of deficits and debt.
The path of adjustment must be carefully calibrated to sustain the recovery in private demand. There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery.
There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth.
Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016.
Seoul, Nov. 2010
The plan includes our commitment to… undertake macroeconomic policies, including fiscal consolidation where necessary
Cannes, Nov. 2011
Taking into account national circumstances, countries where public finances remain strongly commit to let automatic stabilizers work and take discretionary measures to support domestic demand should economic conditions materially worsen.
Los Cabos, June 2012
Advanced economies will ensure that the pace of fiscal consolidation is appropriate to support the recovery, taking country-specific circumstances into account and, in line with the Toronto commitments, address concerns about medium term fiscal sustainability.
Those advanced and emerging economies which have fiscal space will let the automatic fiscal stabilizers to operate taking into account national circumstances and current demand conditions.
Should economic conditions deteriorate significantly further, those countries with sufficient fiscal space stand ready to coordinate and implement discretionary fiscal actions to support domestic demand, as appropriate.
wsj.com
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