US needs aggressive fiscal policy and negative rates – St Louis Fed economist
Policy response must be powerful enough to overshoot previous growth trend for a period
The combination of aggressive fiscal policy and negative rates may be necessary for the US to see a “v-shaped” recovery, a Federal Reserve Bank of St Louis economist says.
“The economic damage from a severe recession can last indefinitely without powerful, overshooting responses from policy-engineered stimulus,” Yi Wen says in a May 29 research note.
Authorities should consider negative rates alongside government spending on infrastructure, he says.
Fed chair Jerome Powell restated the
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