Fiscal Policy and Growth

Abstract

The households have gone crazy, they have decided to give less food to their children, to restrict their essential expenses to the minimum, to buy less clothes and not to pay school fees and tuition for their children, all of this with the sole objective of saving money. Some households save their money in the financial system, but most accumulate it in their houses, under their mattress. The madness also touches investors, their animal spirits have disappeared and they have reduced their investments, because, strangely, they no longer like to obtain earnings. The bankers, on the other hand, no longer lend money; they maintain the deposits of their clients in vaults and prefer to lose interest payments instead of lending money and increasing profits.