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Among the risks that could hamper future growth, Mr. Draghi listed "uncertainties about the resolution of sovereign debt and governance issues in the euro area, geopolitical issues and fiscal policy decisions in the United States".
The report noted that "the negative outlook on Australia reflects our view that without the implementation of more forceful fiscal policy decisions, material government budget deficits may persist for several years with little improvement".
Fiscal policy – decisions affecting tax and spending – has been tightened, but none of the major central banks is planning to raise interest rates or to sell back the bonds they have amassed through quantitative easing.
Mark W. Olson, who served with Mr. Bernanke on the Fed's board of governors and is now co-chairman of Treliant Risk Advisors in Washington, acknowledged that "fiscal policy decisions could either exacerbate or negate monetary policy decisions," but said that Mr. Bernanke wanted to avoid the "oracle trap" into which Mr. Greenspan sometimes fell.
She has been vice chairwoman since 2010, a trying time in which the Fed's largely successful efforts to steer the economy have been made all the more difficult by poor fiscal policy decisions, including the White House's premature pivot from stimulus to deficit reduction, which happened while Mr. Summers was a top adviser to Mr. Obama.
"While debates surrounding the debt limit may raise awareness about the federal government's current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited," the Government Accountability Office reported.
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Mr. Ballew said that comments on the fiscal policy decision-making were more of a "wish than a reality" and so had little apparent impact on the markets.
"To me, the appropriate function of the central bank is to provide generalized liquidity, and not support for particular sectors, which is properly a fiscal policy decision".
Seen in this context, Pataki's insistence on not raising state taxes may represent a genuine fiscal policy decision or it may simply amount to so much political rhetoric.
In effect, national sovereignty would be largely retained and fiscal policy decision-making capabilities and room for manoeuvre would be preserved as long as a country in question complies with the limits on borrowing and debt.
Like other individual countries in the world economy, Eurozone governments do have control over their fiscal policy decisions--how much to tax and spend, as well as what should be the composition of such policies, for example, what should be the magnitude of public sector pensions or how high should the tax rate be on individuals at the upper end of the income scale?
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Justyna Jupowicz-Kozak
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