What is equally important in respect of fiscal management is the quality of public expenditure. If the government borrows and squanders that money away on unproductive current expenditure, both fiscal sustainability and growth would be jeopardized. Governments need to spend on merit goods and public goods, in particular on improving human and social capital and on physical infrastructure.
So, after all this discussion, what is the answer to the question: does the pursuit of the new trilemma militate against growth? No. It does not. But there could be some trade-offs and governments will have to tailor their policies to ensure that the benefit – cost calculus is always maximised. Question 4: what are the limits to unconventional policy measures?