Authors:

  • Alberto Alesina

Excerpt

The Effects of Austerity: Recent Research. Alberto Alesina, October 2015, Paper. "What are the costs in terms of output losses of so-called "austerity" policies designed to reduce large government deficits and mounting public debt? The debate on this issue is raging, especially after the latest round of austerity in Europe.  The question is difficult to answer for at least three reasons. The first is "endogeneity," the two-way interaction between fiscal policy and output growth. Suppose you observe a reduction in the government deficit and an economic boom. It would be highly questionable to conclude that deficit reduction policies generate growth..." Link