Expansionary Austerity New International Evidence

This paper investigates the short-term effects of fiscal consolidation on economic activity in OECD economies. We examine the historical record, including Budget Speeches and IMFdocuments, to identify changes in fiscal policy motivated by a desire to reduce the budget deficit and not by responding to prospective economic conditions. Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP. By contrast, estimates based on conventional measures of the fiscal policy stance used in the literature support the expansionary fiscal contractions hypothesis but appear to be biased toward overstating expansionary effects.

A revealing look at austerity measures that succeed—and those that don't Fiscal austerity is hugely controversial. Opponents argue that it can trigger downward growth spirals and become self-defeating. Supporters argue that budget deficits have to be tackled aggressively at all times and at all costs. Bringing needed clarity to one of today's most challenging economic issues, three leading policy experts cut through the political noise to demonstrate that there is not one type of austerity but many. Austerity assesses the relative effectiveness of tax increases and spending cuts at reducing debt, shows that austerity is not necessarily the kiss of death for political careers as is often believed, and charts a sensible approach based on data analysis rather than ideology.

Selected as a Financial Times Best Book of 2013 Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts--austerity--to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer. That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn't work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we austerity for what it is, and what it costs us.

Since its onset in late 2007, few expected the Great Recession to be protracted for over half a decade across the world. The Rise and Fall of Global Austerity explains the origins and history of austerity, severe implications of the idea of it and how the continuation of the Great Recession was a by-product of austerity measures. Covering austerity policies that are in place in the United States, Europe, and other countries, E Ray Canterbery explains why austerity is detrimental for economies, economic policy and the general health of populations around the world. He highlights the connection between public debt and austerity policies and shows how the austerity lobby works in the United States to achieve its goals. Besides presenting a critique of the rationale for austerity, Canterbery also recommends monetary, fiscal, and incomes policy remedies, and stresses why economic growth and full employment are more ideal and pragmatic antidotes to the Great Recession. Contents:A Brief History of AusterityExpansionary Austerity in the 21st CenturyThe Housing Bubble CollapseHousing's Trickle-Down EffectsThe Great RecessionPublic Debt and Global AusterityUltra-Austerity in EuropeHow Austerity KillsThe Austerity LobbyMonetary RemediesFiscal RemediesIncomes Policy RemediesThe Importance of Economic Growth and Full Employment Readership: Economic historians, researchers, students and members of the public who are interested in political economy and financial institutions. Key Features:Provides a brief history of austerityExplains how the continuation of the Great Recession was a by-product of austerity measuresOne of the few books published after the recession of 2008 to provide detailed policy recommendations to deal with the forces of austerityKeywords:Austerity;Expansionary Austerity;Housing Bubble;Global Great Recession;Austerity Lobby;Monetary Policy;Fiscal Policy;Incomes Policy;Full Employment;Public Debt;Austerity in Europe;Domestic Inequality;Global Inequality;Economic Growth;Post Keynsesians;John Maynard Keynes;Michal Kalecki;Piero Sraffa;Hyman Minsky;Vita Theory;Trickle-Down Economics;Keynesians;Trickle-Up Economics;Keynesian Economics;Trends in Suicide Rates;Health and The Economy;Alan Greenspan;Ben Benanke;Janet Yellen;Federal Reserve Board;European Central Bank;The Euro

The fall-out from the economic and financial crisis of 2008 had profound implications for countries across the world, leading different states to determine the best approach to mitigating its effects. In The Austerity State, a group of established and emerging scholars tackles the question of why states continue to rely on policies that, on many levels, have failed. After 2008, austerity policies were implemented in various countries, a fact the contributors link to the persistence of neoliberalism and its accepted wisdoms about crisis management. In the immediate aftermath of the 2008 collapse, governments and central banks appeared to adopt a Keynesian approach to salvaging the global economy. This perception is mistaken, the authors argue. The “austerian” analysis of the crisis is ahistorical and shifts the blame from the under-regulated private sector to public, or sovereign, debt for which public authorities are responsible. The Austerity State provides a critical examination of the accepted discourse around austerity measures and explores the reasons behind its continued prevalence in the world.

In the immediate aftermath of the global financial crisis of 2008, governments around the developed world coordinated policy moves to stimulate economic activity and avert a depression. In subsequent years, however, cuts to public expenditure, or austerity, have become the dominant narrative in public debate on economic policy. This unique collaboration between economists and linguists examines manifestations of the discourses of austerity as these have played out in media, policy and academic settings across Europe and the Americas. Adopting a critical perspective, it seeks to elucidate the discursive and argumentation strategies used to consolidate austerity as the dominant economic policy narrative of the twenty-first century.

This short book integrates the imperatives of public debt sustainability with those of socioeconomic sustainability in the context of budget austerity measures. It is argued that poverty, inequality and unemployment problems should be integral aspects of policy frameworks for austerity and fiscal stability. The economics of austerity in much of economic analysis remains narrowly focused and lopsided, since the implications on the role of human capital and loss of prosperity base are usually ignored. This book argues that various misapplications of policies of government austerity can be avoided if greater attention is accorded to the imperatives of maintaining the win-win approaches for socioeconomic resilience and sustainability in conjunction with debt sustainability and/or fiscal stability.

Will austerity never end? This timely and insightful book argues that austerity seeks to set the terms of political and economic life for the foreseeable future, extending techniques of exclusion to ever-greater sections of the population.