Such policies are more likely to be sustainable because the boost to GDP that they provide continues to accumulate over time, limiting increases in the debt-to-GDP ratio and preserving fiscal space. In addition, the effects of fiscal policy depend importantly on the relative strength of the broader global economy. In recent years, major foreign economies have been contending with a deficiency of domestic demand.
At a time when the U.S. economy has made important progress on employment and inflation, in both Europe and Japan output or inflation, or both, remain well below desired levels. As a result, forecasters expect short-term yields in these economies to remain near zero for years to come.