Oliver Blanchard: fiscal policy under low interest rates: The MIT Press, 2022.

Professor Oliver Blanchard's book, "Fiscal Policy Under Low Interest Rates," reevaluates the role of fiscal policy and deficit spending in the context of persistently low real interest rates. Blanchard argues that under these conditions, monetary policy is weak and fiscal policy becomes crucial for demand stabilization. He discusses the importance of the inequality (r-g) < 0, where r represents the real rate on government securities and g represents expected real economic growth. Blanchard suggests that deficit spending can be undertaken without much risk to debt sustainability, and explores the concept of "fiscal space" to determine how much deficit spending can be done without risking debt unsustainability. He also discusses the welfare costs and benefits of debt and deficits, provides case studies on fiscal policy in Europe, Japan, and the United States, and emphasizes the need for expansionary fiscal policy to sustain output. The reviewer acknowledges that recent changes in the (r-g) inequality may question some of Blanchard's policy recommendations. The book focuses on fiscal policy and deficit spending, but the reviewer notes that other factors such as regulation, supply-side economics, and the size of the public sector also play a role in maintaining a vibrant economy. The reviewer also raises concerns about the potential social costs of deficit spending on economically wasteful government programs. [Extracted from the article]