0
$\begingroup$

In reading this article of Paul Krugman, we immediately see that in his opinion the literature that defended the possibility of the fiscal multiplier being negative for some high-debt countries, i.e. austerity have expansionary effects on output, is no longer supported.

Is this true?

What papers have since then been produced that support austerity? and what papers have been produced that go against austerity?

Any help would be appreciated.

$\endgroup$
0
$\begingroup$

There has been some papers and articles put forth from the IMF over the last few years suggesting that Austerity has caused many European economies to drag and not recovery from the great recession as well as they otherwise could have. I pulled the first article I found referencing the IMF research (from Washington post): https://www.washingtonpost.com/news/wonk/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/

I think the largest concern with respect to expansionary fiscal policy in today's economic climate is the crowd-out effect that huge public debt can have on private investment. Perhaps someone can link a solid paper about that effect.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.