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Fiscal responsibility and global rebalancing: a speech at the Committee for Economic Development 2010 International Counterparts Conference, New York, New York, December 1, 2010

  • Economics


Fiscal responsibility and global rebalancing For release on delivery 9:10 a.m. EST December 1, 2010 Fiscal Responsibility and Global Rebalancing Remarks by Janet L. Yellen Vice Chair Board of Governors of the Federal Reserve System at 2010 International Counterparts Conference Sponsored by the Committee for Economic Development New York, New York December 1, 2010 Good morning. Thank you for inviting me to be with you today. The Committee for Economic Development has a long and distinguished record in identifying and addressing crucial issues related to our nation’s economic growth and productivity. And today’s conference on fiscal sustainability and the global economy fits squarely within that tradition. My remarks will focus on the challenges faced by U.S. policymakers as they confront the need to put fiscal policy on a sustainable track in the long term while providing support to the economy in the near term. I will also offer some thoughts on the recent actions undertaken by the Federal Reserve and on the implications of our nation’s fiscal and monetary policy choices for the global economy.1 The Challenge of Achieving Fiscal Sustainability in the United States Charting a sensible course for the federal budget is an essential but formidable task for U.S. policymakers. Since the onset of the recent recession and financial crisis, the federal budget deficit has soared as the weak economy has depressed revenues and pushed up expenditures and as necessary policy actions have been taken to help ease the recession and shore up the financial system. At 9 percent of gross domestic product (GDP), the budget deficit in fiscal year 2010 was a little lower than it had been a year earlier, but it was still considerably above the average of 2 percent of GDP during the pre-crisis period from fiscal 2005 to 2007. As a result of th

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