Self-defeating austerity?

Dawn Holland, Jonathan Portes, 1 November 2012

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Is austerity – particularly the fiscal consolidation programmes currently under way in most EU countries  – self-defeating? DeLong and Summers (2012) have argued that, in current economic circumstances, the negative impact of fiscal consolidation on growth may be so great that the impact on debt-GDP ratios will be perverse, causing them to rise rather than fall.

Topics: Macroeconomic policy
Tags: Eurozone crisis, paradox of thrift, self-defeating austerity

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