Credibility is Key for Recovery notes Wolf

4 04 2009

The always clever Martin Wolf, chief economics commentator at the Financial Times, has an interesting column here.  Here’s his main conclusion:

The conclusion is straightforward: the ability to navigate through the crisis, using either fiscal or monetary measures effectively and at modest overall cost, depends in both of these cases on the credibility of the authorities’ commitment to long-term monetary stability. Neither huge fiscal deficits nor massive monetary expansions are themselves an unmanageable threat, provided the regime itself remains credible. This is crucial even for a country as indispensable to the global economy as the US. For the UK, it is close to a matter of economic life and death.



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