But not all fiscal policies are equivalent.

But when and how the Fed will begin tightening monetary policy remains unclear.

Again, a great deal of attention has been lavished on the ebbs and flow of fiscal and monetary policy.

But the room for fiscal policy is wider, so governments must do two things urgently.

Current fiscal policy debates should not focus on simplistic headline numbers.

This latest round of monetary tightening in China reflects the authorities growing concern over liquidity. In 2009, M2 money supply (a key indicator used to forecast inflation) increased by 27 year on year, and credit expanded by 34 .

This latest round of monetary tightening in China reflects the authorities growing concern over liquidity.

A fixed rate was seen as a nominal anchor against inflation, forcing disciplined monetary and fiscal policies.

In Denmark, this has meant a tightening of asylum policies, with support from across the political spectrum in the last three governments.

Russia s censorship spree continues

Among emerging economies, China could face a hard landing by late 2014 if critical structural reforms are postponed, and the other BRICs need to turn away from state capitalism.

The first two components (or arrows ) of Abenomics loose monetary and fiscal policies helped to restore demand.

The eurozone and the UK remain mired in recessions made worse by tight monetary and fiscal policies.

Therefore, tougher punishment is crucial.

Because of the lagged effects of monetary policy and the need to manage expectations, early tightening by the Fed would be appropriate.

Tighter US monetary policy could intensify the global credit shortage, thereby increasing pressure on Asia s economic and financial systems.

On paper, the Greek bailout will impose a fiscal tightening, thereby aggravating the country s economic slump.

A Balance Sheet Approach to Fiscal Policy

This is not the first tightening of the rules for transporting liquids.

But Hatoyama s government has ignored macroeconomic management by abolishing the policy board charged with discussing economic and fiscal policy.

After all, the Stability Pact exists in the first place because Europe lacks a common fiscal policy.

A DIT framework would affirm the commitment to disinflation and price stability as the euro candidates struggle with pro inflationary factors. This would bolster the credibility of monetary policy, enabling the candidates to lower their inflation and exchange rate risk premiums.

A tilt toward monetary rigidity and an expansive fiscal policy through a creeping abandonment of the EU Stability Pact.

Twenty years ago, it may have been true that IMF fiscal policy advice focused on the bottom line of a government s accounts.

This would bolster the credibility of monetary policy, enabling the candidates to lower their inflation and exchange rate risk premiums.

Without monetary policy, fiscal policy or supply side reforms, how else can Japan return to growth except by a depreciation driven export boom?

And, though monetary tightening may well be advisable in some economies, it might be inappropriate in others.

Their challenge was to unite many businesspersons and others to argue for opening the economy, reforming fiscal and tax policies, and other fundamental changes.

But then a strange thing happened the Bush administration did not order any of the three options that were thought to be on the menu.

The combination of credits from the other eurozone countries and lending by the IMF may provide enough liquidity to stave off default for a while. In exchange for this liquidity support, Greece will be forced to accept painful fiscal tightening and falling GDP.

And even in those cases, stock markets barely reacted to the Fed tightening, while bond market volatility proved short lived.

In exchange for this liquidity support, Greece will be forced to accept painful fiscal tightening and falling GDP.

The lack of a fiscal framework hindered credibility.

First, in countries in which there is fiscal space, they must announce credible fiscal expansions we the IMF believe that, as a whole, a global fiscal expansion about 2 of world GDP is both feasible and appropriate.

On rates, it reiterated that some tightening of monetary policy would be needed to cool inflation and by a somewhat greater extent than markets expect.

Europe craves the opposite mix more monetary flexibility, fiscal policies that reduce taxation and national debt, and a labor policy that makes Europe's labor markets more akin to America's.

While monetary policy tightening may be necessary, it risks triggering a serious liquidity crisis in developing countries, with a major impact on economic growth and development.

This includes restoring ties with Europe, tightening the nuclear nonproliferation regime and possibly a restoration of China as the centerpiece of US policy in Asia.

Most economists agree that in the absence of advanced fiscal policy coordination and a real banking union, Europe s monetary union cannot succeed.

Monetary policy can be used in countries where interest rates remain high, but its effectiveness in a credit squeeze is likely to be limited.

Fiscal policy must, therefore, play a central role.

Moreover, given continuing malaise in credit and housing markets, private consumption will remain subdued indeed, two percentage points of the 2.8 expansion in the last quarter of 2011 reflected rising inventories rather than final sales.

Before long, monetary tightening accompanied renewed trade friction with the US, prompting more yen appreciation and another recession.

Fiscal tightening will escalate in 2012 and 2013, contributing to a slowdown, as will the expiration of tax benefits that boosted capital spending in 2011.

Nor is it even a fiscal discipline issue.