# Five Reasons for Slow Growth

1 Opinion December 29, 2014 Project-Syndicate ![A. Michael Spence](/sites/default/files/styles/246w/public/assets/images/con_032670.jpg?itok=cxjGfIlv) By A. Michael Spence > Overoptimistic forecasts delay measures that are needed to boost growth, and thus impede full economic recovery.

A remarkable pattern has emerged since the 2008 global financial crisis: Governments, central banks, and international financial institutions have consistently had to revise their growth forecasts downward. With very few exceptions, this has been true of projections for the global economy and individual countries alike.

It is a pattern that has caused real damage, because overoptimistic forecasts delay measures that are needed to boost growth, and thus impede full economic recovery. Forecasters need to come to terms with what has gone wrong; fortunately, as the post-crisis experience lengthens, some of the missing pieces are coming into clear focus. I have identified five.

First, the capacity for fiscal intervention – at least among developed economies – has been underutilized. As former United States Deputy Secretary of the Treasury Frank Newman argued in a recent book, Freedom from National Debt, a country’s capacity for fiscal intervention is better assessed by examining its aggregate balance sheet than by the traditional method of comparing its debt (a liability) to its GDP (a flow).

Read full article as published in [Project Syndicate](http://www.project-syndicate.org/commentary/slow-economic-growth-reasons-by-michael-spence-2014-12)

\_\_\_
*A. Michael Spence is the William R. Berkley Professor in Economics & Business.*## More Opinions from Michael Spence

- [COVID-19 Is Beating Trump](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/covid-19-beating-trump)
- [COVID-19 and the Trust Deficit](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/covid-19-and-trust-deficit)
- [The Priority for the Social-Distancing Period](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/priority-social-distancing-period)
- [Can China’s Economy Withstand the Coronavirus?](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/can-china-s-economy-withstand-coronavirus)
- [What My Younger Self Never Expected](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/what-my-younger-self-never-expected)