Other governments have worked hard to engage in this global order because they, too, understand the benefits that it can bring to their citizens. We now face two challenges. First, we must think globally about how best to update the rules of the game to take into account the evolving nature of the global economy.
The development of a counter-cyclical fiscal strategy should also strike the balance in the allocation of surplus revenues between the proposed rainy day fund and reducing the gross stock of public debt. In addition to ensuring that the fiscal balance is set at a cyclically-appropriate level, the government can use additional tools to mitigate overheating pressures, including the deployment of cyclically-varying expenditure taxes.