National fiscal policy responses to the Great Recession

The International Monetary Fund recommended that countries implement fiscal stimulus measures equal to 2% of their GDP to help offset the global contraction.

[1] In subsequent years, fiscal consolidation measures were implemented by some countries in an effort to reduce debt and deficit levels while at the same time stimulating economic recovery.

[2] The United States combined many stimulus measures into the American Recovery and Reinvestment Act of 2009, a $787 billion bill covering a variety of expenditures from rebates on taxes to business investment.

[3] Announcements of rescue plans were associated with positive returns whereas a public intervention in favor of a specific bank showed negative impacts.

[4] A statement on the government's website said the State Council had approved a plan to invest 4 trillion yuan in infrastructure and social welfare by the end of 2010.

[5][6] This stimulus, equivalent to US$586 billion, represented a pledge comparable to that subsequently announced by the United States, but which came from an economy only one third the size.

[7] The stimulus package will be invested in key areas such as housing, rural infrastructure, transportation, health and education, environment, industry, disaster rebuilding, income-building, tax cuts, and finance.

[20] Compared to other European nations, Germany was in a unique position: It had low debt, a high balance of trade, and an export driven economy.

[25] In November 2008, the Dutch government passed a 6bn euro plan that mainly consisted of tax breaks for businesses that made larger investments and hired short-term workers.

[19] In January 2009, the Dutch added a variety of guarantees to help ensure and encourage exports, corporate loans, and home and hospital construction.

[29] After 2008, the UK was limited in its ability to take discretionary fiscal action by the significant burden that bank bail-outs had on public finances.

[39] The packages were praised by various business groups, economists, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).