Fiscal Policy Responses to the Economic Crisis in the United Kingdom and the United States: A Comparative Assessment
19 Pages Posted: 1 Aug 2011 Last revised: 12 Aug 2011
Date Written: 2011
Despite the many references to an “Anglo-Saxon model” there were, as the financial crisis unfolded, important discretionary fiscal policy differences between the US and the UK. This paper considers the reasons why the US adopted a far larger fiscal stimulus (as a share of 2008 GDP) than the UK, the Labour government in the UK committed itself to early fiscal retrenchment, and the UK failed to embrace spending projects whereas they constituted a sizeable proportion of the US total. Although relative deficit and debt levels should be considered and agency-based variables cannot be disregarded, the paper emphasizes the part played by underlying economic variables and the institutional architecture. It suggests that there were particular opportunities open to the Obama administration in its early months while the Labour government in the UK faced significant constraints.
Keywords: united states, united kingdom, discretionary fiscal policy, presidential transitions, institutionalism
Suggested Citation: Suggested Citation