The Government as risk bearer of last resort

I suggested Governments should be countercyclical investors in asset markets in a speech in 2002 (pdf) and now smarter people than me think it’s a good idea. Like Nobel Prize winner Michael Spence and John Muellbauer of Oxford Uni and Martin Wolf who references the other two.

Worse things could happen in this crisis than for the Government to discover that it has a balance sheet, which it can manage to optimise economic outcomes rather than just operate as the residual borrowing/investing from its operating account.

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