The monetary policy has been preferred to fiscal policy to fight the recession, at least for United States. While Quantitative Easing has been recurrently applied in many episodes, from QE1 to the more recent QE4, there has been less attention paid to the possible uses of fiscal policy.
To many, this is not news. However, given the persistence of IMF and other international institutions to insist with new austerity measures, it is still surprising.
The sovereign debt crisis, see also my blog post on the sovereign debt crisis that focused on deficit spending, has made more evident than ever that the Euro Area is deficient in many respects and one could reasonable state that it is far from an optimal currency area.
The European sovereign debt crisis continues to attract a lot of attention on both sides of the Atlantic. The analysts have proposed many several potential causes for this crisis and, obviously, the lack of fiscal discipline, including the issue of deficit spending, is widely considered as one of the most important ones. An analysis of this issue can shed some light on the problem of deficit spending which is highly debated in the United States in the last years.