no long - run effect on the growth rate. the exception is the fact that they may increase private sector ’ s yields and, in that case, public investment could have positive effects on growth. this ultimately can be seen as an improvement in productivity, and might help to understand why the fiscal policy effect on growth seems to be underestimated, as daniel cohen pointed out on his exposition. but, as we are aware, models are set for very limited environments and the real world is extremely complicated. santiso made this point clearly. i am not saying that we must forget about theory. instead, i am suggesting that, in very dynamic economies, we, policy makers, should relay as much on models as we do on good judgment. the world is not linear, we have many discontinuities in the form of shocks from many different sources. it would be too much to ask a model to be able to account for these regular irregularities and, further, to be able to extract sound policy advice from it. another relevant issue on fiscal policy relates to the appropriate moment for implementation, especially with regard to its implications for stability. in this respect, we need to identify better ways to put together long - run objectives with short - run ones. in the later case, we are more prone to recognize its role as a stabilizing force. however, the ability of fiscal policy on reducing the volatility of the economic cycle is under deep scrutiny, especially in the developed world. probably this has to do with the usual handing over of the stabilizing role to monetary policy. also, the budgetary process seems to be too rigid to be able to respond in a timely way. in developing economies, usually more exposed to external shocks that hinder long - run fiscal sustainability, the implementation of countercyclical policies seems to be more difficult. notwithstanding, there is mounting evidence on the relevance of fiscal policy as a stabilizing economic force. as we are witnessing today, when there are dual mandates and divergent paths, we, central bankers, are confronted with an extremely challenging task that calls for coordination with other economic policy instruments, that gives more room for fiscal action. as an answer to the budgetary rigidities, there is a growing case for fiscal rules. many countries are putting in place this kind of framework as an institutional device to preserve the countercyclical role of fiscal policy. we heard relevant experiences such the uk and chile, showing the applicability to both

don ’ t share my view, will i be able to get my money back? with a lender - of - last - resort added to the picture, i no longer need to know what others think. as long as the lender - of - last - resort is available, if i am correct in my assessment that the firm is solvent, then i can be assured that i will be paid back. this issue was particularly relevant during the financial crisis when counterparties even pulled back from firms that were widely viewed as solvent. the federal reserve stepped in and created funding backstops for a wide array of assets, such as commercial paper and asset - backed securities. this bolstered the confidence of counterparties in one another and restored market and funding liquidity. of course, this type of lending is only feasible to an institution that is deemed to be solvent with sufficient collateral available to pledge to the lender - of - last - resort so that it can safely secure its loan. in practice, all of these methods are in place to address funding liquidity risk. capital requirements have been increased ; there is much better reporting about how firms will do under significant stress tests ; liquidity requirements – such as the liquidity coverage ratio – provide a buffer that allows management more time to respond to problems ; and, if necessary, the central bank can act as the lender - of - last - resort to support market confidence and funding liquidity. so, should more be done to support funding liquidity? in my view, an important issue is to identify and address gaps in the lender - of - last - resort function. in the u. s., some significant gaps remain. for example, the federal reserve has a very limited ability to provide funding to a securities firm, even on a fully collateralized basis. the discount window is only available to depository institutions, and section 23a of the federal reserve act severely constrains the ability of a depository institution to pass discount window funding along to its securities affiliate. although the federal reserve may be able lend to a securities affiliate under its emergency lending authority under section 13 ( 3 ) of the federal reserve act, this is not a standing facility – it can only be established if “ unusual and exigent ” circumstances exist and the program or facility must have broad - based eligibility, among other requirements. 8 a program or facility has broad - based eligibility only if it is designed to provide liquidity to an identifiable market or sector of