Fiscal multipliers: Where does the buck stop?

Posted: August 12, 2016 in economy
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Cheating death

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Fiscal multipliers

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Fiscal stimulus, an idea championed by John Maynard Keynes, has gone in and out of fashion

AT THE height of the euro crisis, with government-bond yields soaring in several southern European countries and defaults looming, the European Central Bank and the healthier members of the currency club fended off disaster by offering bail-outs. But these came with conditions, most notably strict fiscal discipline, intended to put government finances back on a sustainable footing. Some economists argued that painful budget cuts were an unfortunate necessity. Others said that the cuts might well prove counterproductive, by lowering growth and therefore government revenues, leaving the affected countries even poorer and more indebted.
In 2013 economists at the IMF rendered their verdict on these austerity programmes: they had done far more economic damage than …

via Economic Crisis


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