Let me now turn to house prices which have implications not only for demand but also for financial stability. House prices Real estate prices are conceptually somewhat different from the prices of goods and services. While prices are generally determined by supply and demand, real estate prices additionally reflect market’s expectations of future prices.
I need to mention that fiscal expansions in many countries with relatively-low debt levels in the immediate aftermath of the Lehman crisis were successful in lessening the impact of the dislocation in their real economies. Even in those countries, however, there is now a need for decisive actions to achieve a lasting and credible consolidation of public finances.