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In both cases, if reduced government spending leads to reduced GDP growth, austerity may lead to a higher debt-to-GDP ratio than the alternative of the government running a higher budget deficit. In the aftermath of the Great Recession , austerity measures in many European countries were followed by rising unemployment and slower GDP growth.
For example, Keynes argued that the time for austerity (deficit reduction through tax increases and spending cuts) was during a booming economy, while increasing the deficit is the right policy prescription during a slump (recession). During the pandemic recession of 2020, several economists argued that deficits and debt reduction were not ...
Considering that the U.S. debt and deficit are so far out of control that we must implement austerity measures sooner rather than later — it’s more a question of “when” than “if ...
What the Reinhart-Rogoff affair shows is the extent to which austerity has been sold on false pretenses. For three years, the turn to austerity has been presented not as a choice but as a necessity. Economic research, austerity advocates insisted, showed that terrible things happen once debt exceeds 90 percent of G.D.P.
"Congress has to reduce the deficit," Republican Representative Andy Barr said. "The bond market is telling Congress that if we don't get our fiscal house in order, everybody's mortgage rates ...
Lombardi says the austerity measures could affect the U.S. in a number of ways. The most significant is trade -- the U.S. sends one-fifth of its exports to Europe. If the continent is going to ...
An IMF working paper [4] by Guajardo, Leigh, and Pescatori [5] published in Journal of the European Economic Association on Expansionary Austerity and the Expansionary Fiscal Contraction hypothesis that examined changes in policy designed to reduce deficits found that austerity had contractionary effects on private domestic demand and GDP.
Republicans who control the U.S. House of Representatives are trying to overcome internal differences on how to pay for President Donald Trump's sweeping tax cuts, with hardline conservatives ...