ABSTRACT
Policy makers in many countries have forgotten the logic and success of Keynesian counter cyclical policy. Even the IMF has performed something of a U-turn, and shown that fiscal policy in advanced economies has been much more contractionary during the current Great Recession than in previous recessions, though not in emerging economies, thus contributing to the greater duration and depth of the current downturn in many advanced economies. In 2015, with most of the world's major economies still operating far below potential or full employment, green fiscal policy offers a perhaps unique opportunity to start major mitigation programmers with government investment in key areas, which also provide a financial payoff in the short- to medium term. Replacing increasingly meaningless Gross Domestic Product (GDP) growth targets and comparisons with the simple goal of full employment would thus be a natural complement to green fiscal policy.
