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The Boom Not The Slump: The Right Time for Austerity?


Via pdeppisch, oAnth - "offene Ablage: nothing to hide"
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oAnth - "offene Ablage: nothing to hide"'s curator insight, March 10, 2013 9:20 PM

 

[...]

 

A recent paper by Alberto F. Alesina and Silvia Ardagna
(2009), “Large Changes in Fiscal Policy: Taxes Versus
Spending” (henceforth A & A), looks at a cross section of
deficit reduction policies among different countries. It
examines examples where large-scale deficit reduction is
associated with economic expansion and where the
debt-to-GDP ratio falls in the medium-term (3 years
a#er the adjustment). Based on this research, many
popular commentators suggest that the U.S. can adopt
such a policy and grow.1


However, upon a further examination of the data such a
conclusion is unmerited. The overwhelming majority of
the episodes used by A & A did not see deficit reduction
in the middle of a slump. Where they did, it o#en
resulted in a decline in the subsequent growth rate or an
increase in the debt-to-GDP ratio. Of the 26 episodes
that they identify as ‘expansionary’, in virtually none did
the country a) reduce the deficit when the economy was
in a slump and b) increase growth rates while reducing
the debt-to-GDP ratio. The sole example not covered
by those two qualifiers can be explained by a
combination of two policy maneuvers that are not easily
available to the U.S. at the moment: currency
depreciation and interest rate reduction.

 

[...]

 

open access: http://www.rooseveltinstitute.org/sites/all/files/not_the_time_for_austerity.pdf

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From Contagion to Incoherence: Toward a model of the unfolding Eurozone Crisis

From Contagion to Incoherence: Toward a model of the unfolding Eurozone Crisis | manually by oAnth - from its scoop.it contacts | Scoop.it

 

 

 

 

 

 

This post offers readers a fully-fledged analytical model of the unfolding Eurozone Crisis. It begins with a macro-economic analysis of the Crisis’ causes and then, importantly, models the feedback between Europe’s institutional and policy responses and the contagion process that began with Greece. For the fully-fledged (wonkish) version of the paper,

 

 

 

click here ( http://varoufakis.files.wordpress.com/2013/03/from-contagion-to-incoherence-a-simple-macroeconomic-model-of-the-eurozone-crisis1.pdf ). What follows below is a maths-free summary of each of the paper’s sections.

 

[...]

 

 


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