Can the world grow without fiscal and monetary stimulus?

- "Our concern is based on the observation of recent trends: after the tightening of monetary conditions and the slowdown in credit and after the beginning of the reduction in fiscal deficits, there has been a slowdown in global growth."
- "This could show that highly stimulatory monetary and fiscal policies are needed to maintain robust global growth, which would be worrying. Why would that be the case? We can imagine that:
• global private savings have become excessive, which explains the slump in consumption;
• risk aversion has increased due to the crises, which explains the depression in investment;
• the private sector debt ratio has become excessive, and this must be offset by an abnormally expansionary monetary policy."

Natixis Flash Economics 421 20100827

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