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Rescooped by oAnth - "offene Ablage: nothing to hide" from Economics: Its History and Politics
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The Boom Not The Slump: The Right Time for Austerity?


Via pdeppisch
oAnth - "offene Ablage: nothing to hide"'s insight:

 

[...]

 

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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Rescooped by oAnth - "offene Ablage: nothing to hide" from Economics: Its History and Politics
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Should One Fix Monetary Policy Or Fix A ‘Sclerotic’ European Labour Market?

Should One Fix Monetary Policy Or Fix A ‘Sclerotic’ European Labour Market? | oAnth's day by day interests - via its scoop.it contacts | Scoop.it
Perspectives from a New Keynesian model New Keynesian macroeconomics (henceforth NK) was born as a defensive reaction to the radical agenda of the new classical economists of the late ‘70s vintage....

Via pdeppisch
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Rescooped by oAnth - "offene Ablage: nothing to hide" from Economics: Its History and Politics
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Roubini: Ten QE Questions

Roubini: Ten QE Questions | oAnth's day by day interests - via its scoop.it contacts | Scoop.it
Most observers regard unconventional monetary policies such as quantitative easing (QE) as necessary to jump-start growth in today’s anemic economies. But questions about the effectiveness and risks of QE have begun to multiply as well. In particular, ten potential costs associated with such policies merit attention.

 

First, while a purely “Austrian” response (that is, austerity) to bursting asset and credit bubbles may lead to a depression, QE policies that postpone the necessary private- and public-sector deleveraging for too long may create an army of zombies: zombie financial institutions, zombie households and firms, and, in the end, zombie governments. So, somewhere between the Austrian and Keynesian extremes, QE needs to be phased out over time.


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Rescooped by oAnth - "offene Ablage: nothing to hide" from Heterodox economics
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Is an Anti-Austerity Alliance of Left Neo-classicals and Post-Keynesians Possible? Is it Desirable? (Part 2) « naked capitalism

Commentary on current economic and financial news.

Via Nicholas Ripley
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