Stimulus policies are no substitute for supply-side reforms

Low interest rates signal that the government can borrow more since its repayment conditions will be more favourable in times of historically low bond yields (at least in the USA and the UK). This is an example of a counter-cyclical economic policy, one that tries to stimulate the economy out of a recession, and within its scope it is viewed as acceptable to increase the deficit and raise public debt in order to get the economy growing in the short run.

Read the full blog post here

Source: http://www.iea.org.uk/blog/stimulus-policies-are-no-substitute-for-supply-side-reforms

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