The Economic Outlook and Options for Fiscal Policy, October 27, 2010

• “CBO expects that the economic recovery will proceed at a modest pace, leaving the unemployment rate above 8 percent until 2012.
• There are monetary and fiscal policy options that, if applied at a sufficient scale, would increase output and employment during the next few years (but not overnight).
• Such options would have costs as well. Expansionary fiscal policy would increase federal debt, which is currently larger relative to the size of the economy than it has been in more than 50 years—and is headed higher.”
• Related postings on financial system
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