Wednesday, 22 June 2016

The Myth of Austerity and Growth

Noah Smith has a great new article on the above title.

A few comments :

  • Why would Mankiw cite a 2002 paper and ignore all papers since then.
  • The paper he cites was co-written by Blanchard and Perotti. Both have now publicly recanted  their positions on this subject. No mention from Greg?
  • Blanchard and Leigh found fiscal multipliers much higher than previously thought.  Surely if expansionary austerity worked Europe would be in the midst of a boom!
  • THIS paper from long ago completely demolished Austerity. Ireland for example tried it THREE times yet it only worked once. It worked mainly because its main  export market the UK was in a boom, Their currency fell considerably and interest rates were cut a lot
  • Why is this witch doctoring still peddled?