Keynes Seminar 2019-2020

Speakers: Prof. Christina Romer (Berkeley) & Prof. David Romer (Berkeley)

Title: "Fiscal Space and the Aftermath of Financial Crises: How It Matters and Why"

Date: 15 October 2019

Time: 3:30pm

Location: Meade Room, Faculty of Economics

Websites: http://eml.berkeley.edu/~cromer/ | https://eml.berkeley.edu/~dromer/

Professor Christina Romer is the Class of 1957-Garff B. Wilson Professor of Economics, University of California, Berkeley.
Professor David Romer is an American economist, the Herman Royer Professor of Political Economy at the University of California, Berkeley.

Seminar information: "Fiscal Space and the Aftermath of Financial Crises: How It Matters and Why."
There is tremendous variation in the aftermath of financial crises across countries. We find that much of this variation reflects differences in the ability or willingness of policymakers to use fiscal policy to counteract the effects of financial distress. This paper explores why a country's debt-to-GDP ratio appears to drive the fiscal response to a crisis. We find little empirical evidence that the debt ratio affects the fiscal response through problems with sovereign market access. This fact, together with contemporary narrative accounts, suggest an important role for policymakers' ideas in creating a link between fiscal space and the fiscal policy response to a severe financial distress.