Fiscal tightening still not over, but the worst may have passed

Clearly, the fiscal issues dominating the news at present are the US government shutdown and threat of default. We discuss the recent trends in the US and other advanced economies on pages 3- 4. But assuming that the US avoids the worst, a key question for the coming years is how the normalisation of US monetary policy will affect the public finances of advanced economies around the world. We address that question in the first half of this Global Fiscal Watch.