Implications for policies With the right policy response, we can mitigate the economic consequences of the war and manage the high levels of uncertainty we are facing. To offset the short-term effects of higher energy prices and sanctions, national fiscal policies have a range of tools to deploy, such as tax cuts and subsidies.
The recession has been followed by sluggish recovery in many advanced market economies. The current situation is placing a very large role for monetary policy. This is straining the usual boundaries between monetary and fiscal policy. 3. The fiscal deficits led to rapidly rising levels of public debt, which are now a huge concern.