More generally, countries that could use fiscal space, won’t; and many that would use it, shouldn’t. That leaves us with structural reforms. Some, like upgrading education and judicial efficiency, are important but take a long time to implement and to produce results. The structural reforms economists often have in mind (i.e.
Policymakers are typically poor forecasters, and central bankers are no exception.2 This is nothing to be ashamed of. It merely testifies to the fact that the past is often a poor predictor of the future. You can see this quite clearly for the euro area on my first slide. We call it the “spaghetti chart”.