Chapter 2

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OECD economic Outlook, Volume 2016 Issue 2 OECD 201663Chapter 2USING THE FISCAL LEVERSTO ESCAPE THE LOW- growth TRAP2. USING THE FISCAL LEVERS TO ESCAPE THE LOW- growth TRAPOECD economic OUTLOOK, VOLUME 2016 ISSUE 2 OECD 201664IntroductionAlmost a decade after the outbreak of the financial crisis, the global economy remainsin a low- growth trap with weak investment, trade, productivity and wage growth and risinginequality in some countries. Monetary policy is overburdened, leading to growingfinancial risks and distortions. Alongside structural reforms, a stronger fiscal policyresponse is needed to boost near-term growth and strengthen long-term prospects forinclusive , in the context where public debt has reached high levels in most OECDcountries, it is important to assess the extent of countries' fiscal space and the temporarydeficit increase they can afford to run.

OECD Economic Outlook,Volume 2016 Issue 2 © OECD 2016 63 Chapter 2 USING THE FISCAL LEVERS TO ESCAPE THE LOW-GROWTH TRAP

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