In addition, population ageing poses many policy challenges, and the policy choices that are made will have significant implications for trend savings and investment rates. In addition, in the event of negative shocks, the speed of convergence back to steady state can be accelerated if macroeconomic stabilisation is supported by counter-cyclical fiscal policies (where feasible) in addition to the stabilisation policies of central banks.
In addressing the safe-asset premium, policies that reduce negative tail risk are essential.