Many advanced country governments face the dual challenge of promoting job growth while pushing ahead with spending cuts. This column discusses how well-designed fiscal policy reforms can help boost employment without busting the government budget.
Benedict Clements, Ruud de Mooij, Gerd Schwartz, Sunday, September 9, 2012
Carlo Favero, Francesco Giavazzi, Friday, September 7, 2012
The austerity debate hangs on the question of how fiscal policy affects economic output – but answering that question is no easy task. This column presents a paper that, it argues, overcomes some of the problems with identifying cause and effect.
Coen Teulings, Thursday, September 13, 2012
Many OECD countries suffer from high sovereign debts. Sooner or later, this problem must be addressed. Many argue that this will require some form of fiscal retrenchment or institutional reform or a combination of the two. This column argues that the two are not complements as many suggest – they are instead substitutes.
Nitika Bagaria, Dawn Holland, Jonathan Portes, John Van Reenen, Tuesday, August 14, 2012
While most economists agree that the UK and other countries need to cut back to ensure the sustainability of their public finances, the debate rages over when and by how much. This column argues that the timing matters – starting too early, before the economy has recovered, will have substantial economic costs.
Jeffrey Frankel, Tuesday, August 7, 2012
Is austerity good or bad? This column argues that it is as foolish to argue this question as it would be to debate whether it is better to drive on the left or right. Procyclical fiscal policy, on the other hand, is another question.
Daniel Gros, Thursday, July 19, 2012
Despite the EZ doom and gloom discussion, the US and EZ are at roughly the same point in their recovery from the global crisis. This column argues that the ‘austerity kills’ narrative of Krugman and Layard misses the basic point. Public debt ratios without retrenchment would become unsustainable. The fact that austerity is costly does not mean it should not be undertaken.
Richard Layard, Friday, July 6, 2012
Richard Layard of the LSE talks to Viv Davies about his and Paul Krugman’s recently published ‘Manifesto for Economic Sense’, which aims to generate a movement of economists who are prepared to speak out against policies they know to be wrong - the excessive austerity of current fiscal policies. They discuss the role of the ECB as lender of last resort and whether the current bank-led capitalist culture can ever be changed. The interview was recorded in London on 5 July 2012.
Richard Layard, Thursday, June 28, 2012
Many economists believe that the austerity-first strategy currently pursued by EZ leaders is self-defeating. In this column, Richard Layard introduces a Manifesto for Economic Sense and invites economists across the world to add their name to it.
Giancarlo Corsetti, Saturday, June 23, 2012
The French and Greek elections, together with a softer than expected Eurozone macroeconomy, are forcing a rethink of the austerity-only solutions embraced by political leaders across Europe. This column introduces an ‘eCollection’ that brings together analysis by a dozen leading thinkers on austerity. The book also launches ‘eCollection’ , a new VoxEU.org vehicle for disseminating research-based policy analysis by the world’s top economists.
Giancarlo Corsetti, Saturday, June 23, 2012
This eCollection summarizes the views of leading economists about the path and content of budget adjustment that can help advance economies to move out of the crisis, and resolve the policy impasse that is unsettling the Eurozone.
Charles Wyplosz, Monday, May 14, 2012
With French and Greek voters rejecting austerity, politicians are once again taking the government spending debate seriously. This column argues that the voters are right – it is a bad idea to tighten fiscal policy when growth is so feeble. But the column adds that, wherever one looks, the road away from austerity looks desperately blocked.
Marco Annunziata, Monday, May 14, 2012
In Greece and Spain, around half of all workers under 25 are now unemployed. In Italy, Ireland, and Portugal, the rate of youth unemployment is around one in three. But this column argues that we shouldn’t go blaming austerity; even when these countries were booming, youth unemployment was still painfully high. The problem is far deeper.
Francesco Daveri , Tuesday, May 8, 2012
Voters in France, Greece, Italy, and Germany rewarded politicians who opposed austerity. This column argues that attempts to fulfill campaign promises will run up against a hard constraint. The countries whose voters are calling for looser fiscal policies are those where public spending rose fastest since the birth of the euro. The only way out of today’s difficulties is to use the flexibility already in the fiscal compact and continue with bold implementation of the economic reforms that are under way.
Charles Wyplosz, Wednesday, May 2, 2012
Mindless austerity is losing policy credibility in some Eurozone nations. This column suggests governments shouldn’t mix long-term growth and fiscal discipline nor produce another Lisbon strategy. Instead, they should adopt a framework for fiscal policy cooperation, restructure debts, and remember that fiscal discipline is for the long run.
John Van Reenen, Friday, April 27, 2012
Many policymakers in Europe seem to stick to the idea that fiscal consolidation might inspire confidence and help the economy to grow. This column argues these sentiments may be understandable but are basically wrong. For countries like the UK where borrowing is relatively cheap and sovereign default unlikely, slowing down the pace of fiscal consolidation would be a rational response. The obsession over the fiscal stance is a distraction from sustainable long-run growth.
Ugo Panizza, Andrea F Presbitero, Sunday, April 22, 2012
Countries with high public debt tend to grow slowly – a correlation often used to justify austerity. This column presents new evidence challenging this view. The authors point out that correlation does not imply causality – it may be that slow growth causes high debt. They argue that policymakers should be wary – the case for cutting debt to boost growth still needs to be made.
Marco Buti, Lucio R Pench, Friday, April 20, 2012
Most economists agree that European economies share the need to reduce public deficits and debts. This column stresses that while gradual consolidations are in general more likely to succeed than cold-shower ones, the superiority of a gradual strategy tends to evaporate for high levels of debt and is also less pronounced for consolidation episodes following a financial crisis.
Carlo Cottarelli, Friday, April 20, 2012
As with austerity itself, the austerity debate shows no sign of disappearing any time soon. This column argues that the last thing that the world economy needs at this uncertain moment is a knee-jerk reaction from fiscal policy. While the column agrees that governments need to make cuts, it stresses they should not lose sight of the bigger picture.
Manfred J M Neumann, Tuesday, April 17, 2012
Debt finance of public consumption has clearly gone too far in several countries, reaching the borderline of sustainability. Have austerity measures now gone too far as well? This column argues it seems too early to sound the alarm. First, the global economy is likely to grow by 3.3 % this year, and second, reversing the fiscal stance or exiting the euro are worse options than austerity.
Giancarlo Corsetti, Monday, April 2, 2012
Is austerity self-defeating? Is it keeping Europeans underemployed for years and destroying the very growth needed to pay off the debt? Or is it steering nations clear of Greek-like tragedies? So starts a new debate on Vox on austerity, introduced in this column.