The Importance of Fiscal Versus Monetary Stimulus    •
Commentary  Which has been more important for the markets over
the past two years: fiscal or monetary stimulus?  This is a
crucial question investors, in developed markets particularly,
face right now. Although monetary policy is unlikely to loosen
further any time soon, it remains extremely accommodative. But
fiscal policy is being tightened across the euro zone, in the
U.K. and even the U.S. faces the prospect of increasing
sobriety.  Will monetary policy be enough to allow a smooth
adjustment from public-money-dominated growth to a sustained
privately-driven expansion?  Unlikely, according to Richard Koo,
Nomura’s chief economist and a specialist on Japan’s lost
decade. Countries suffering balance-sheet recessions, like Japan
faced during the 1990s and the U.S. and U.K. are struggling
through now, need fiscal life support for a long time, he
argues.  That’s because demand for the sort of credit that
accompanies normal expansion is depressed. Households