Tide turning towards stimulus

With central banks running out of firepower, public finances in a better state than they have been for a long time and sovereign bond yields exceptionally low, it is not surprising that some governments have recently scaled back their austerity plans and others have announced a fiscal stimulus. For advanced economies as a whole, this does not yet amount to a dramatic policy change, but it does mean that fiscal policy should provide a small net boost to growth in the coming years. Over the medium term, a bigger policy shift maybe on the cards.