THE NEW CONSENSUS UNDER STRESS: THE FINANCIAL CRISIS AND THE FISCAL POLICY COMEBACK

Resumen

From the 1980s, mainstream macroeconomic thinking experienced a strong
convergence in methodological assumptions and policy proposals for more than two
decades. This “New Macroeconomics Consensus” was characterized by the role played
by the monetary policy in macroeconomic adjustment. Fiscal policy was set aside; it
should only be concerned with keeping public debt in a stable path in order to ensure
the “economic fundamentals”. However, the need for active and unconventional
policy measures during the 2008 global economic crisis brought fiscal policy back to
the mainstream debate. This paper briefly describes this convergence, discussing the
role it assigned for fiscal policy before the crisis, and then examines the issues the postcrisis debate concentrated on, showing how it differs from the previous mainstream
conception of fiscal policy. We suggest that mainstream limitations to deal with fiscal
policy may have opened a window of opportunity for a broader review of its role as a
policy tool.