Give any one reason supporting the need for economic reforms?
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The 2008-2009 global financial crisis led to a number of large–scale government interventions across the world. These included massive provisions of liquidity, the takeover of weak financial institutions, the extension of deposit insurance schemes, purchases by the government of troubled assets, bank recapitalization and, of course, packages of fiscal stimulus, sometimes of a scale not seen since World War II.
Even the IMF, the world’s traditional guardian of sound public finance, came out strongly in favor of fiscal loosening, arguingthrough its managing director that “if there has ever been a time in modern economic history when fiscal policy and a fiscal stimulus should be used, it’s now” and that it should take place “everywhere where it’s possible. Everywhere where you have some room concerning debt sustainability. Everywhere where inflation is low enough not to risk having some kind of return of inflation, this effort has to be made”.
One can argue whether the responses to the crisis were well-designed in particular countries, but there seems to be broad consensus that rapid international action on a number of fronts was necessary to prevent a 1930s-like depression with unforeseen global economic consequences. In the years that followed, public debt levels rose rapidly, particularly among the advanced economies. Spain, for instance, saw its debt levels rise from under 37% of GDP in 2007 (well within the Maastricht criteria) to about 100% of GDP in 2014, according to IMF estimates.
Even the IMF, the world’s traditional guardian of sound public finance, came out strongly in favor of fiscal loosening, arguingthrough its managing director that “if there has ever been a time in modern economic history when fiscal policy and a fiscal stimulus should be used, it’s now” and that it should take place “everywhere where it’s possible. Everywhere where you have some room concerning debt sustainability. Everywhere where inflation is low enough not to risk having some kind of return of inflation, this effort has to be made”.
One can argue whether the responses to the crisis were well-designed in particular countries, but there seems to be broad consensus that rapid international action on a number of fronts was necessary to prevent a 1930s-like depression with unforeseen global economic consequences. In the years that followed, public debt levels rose rapidly, particularly among the advanced economies. Spain, for instance, saw its debt levels rise from under 37% of GDP in 2007 (well within the Maastricht criteria) to about 100% of GDP in 2014, according to IMF estimates.
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