Self-defeating austerity?

Dawn Holland, Jonathan Portes 01 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.

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Topics:  Macroeconomic policy

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

The global imbalances and the paradox of thrift

Max Corden,

Date Published

Mon, 04/11/2011

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http://www.cepr.org/pubs/PolicyInsights/CEPR_Policy_Insight_054.asp

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global imbalances, global crisis, exchange-rate policy, paradox of thrift

Global imbalances and the paradox of thrift

Max Corden 11 April 2011

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The global imbalances are widely seen as a problem, especially by the US government and US economists. Sometimes they are even seen as a cause of the financial crisis (Suominen 2010). Yet such imbalances – i.e. current-account surpluses and deficits – reflect international intertemporal trade, and there should be gains from such trade as from “ordinary” trade, on the basis of standard arguments for free trade (see Obstfeld and Rogoff 1996, Chapter 1).

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Topics:  Global crisis International trade

Tags:  global imbalances, global crisis, exchange-rate policy, paradox of thrift

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