The Myth of Expansionary Fiscal Austerity

Dean Baker

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: Recently governments, economists, and international financial institutions have been debating the merits of further fiscal stimulus to combat the Great Recession versus fiscal austerity or “adjustment” – that is, higher taxes and/or lower government spending – to combat budget deficits. Some supporters of austerity have gone as far as arguing that fiscal adjustment could restore economic growth. These analyses are being touted to oppose increased stimulus to boost the economy. This paper examines the arguments for austerity and emonstrates that current economic conditions in the United States do not support the case for fiscal adjustment.

Keywords: budget deficit; deficit; fiscal austerity; stimulus; unemployment; deficit spending (search for similar items in EconPapers)
JEL-codes: E E6 E60 E61 E62 E63 E64 E65 E66 H H2 H5 H6 H60 H61 H62 H63 H68 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2010-10
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-pke
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2010-23

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