Many OECD countries suffer from high sovereign debts. Sooner or later, this problem must be addressed. That will require some form of fiscal retrenchment.
Fiscal consolidation and reforms: Substitutes, not complements
Coen Teulings, 13 September 2012
Fiscal adjustments and the recession
Alberto Alesina, 12 November 2010
Many European countries are engaged in large fiscal adjustments. The standard Keynesian view is that these adjustments will cause deep recessions especially if they occur on the spending side (see for example Krugman 2010).
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