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Fiscal Austerity

Author

Listed:
  • Giuseppe Fontana
  • Malcolm Sawyer

Abstract

As economic austerity threatens to sweep Europe, the highly unrealistic expectations about the benefits of government spending cuts are not fully appreciated by the public. It is unlikely that they will result in substantial expansion; to the contrary, potentially they are extremely contractionary. The strong analysis in this piece, using the British budget proposals as a key example, starkly shows that the required changes in investment, savings, and other variables by the private sector to produce growth are utterly implausible. Slow growth, or even recession, is the likely outcome.

Suggested Citation

  • Giuseppe Fontana & Malcolm Sawyer, 2011. "Fiscal Austerity," Challenge, Taylor & Francis Journals, vol. 54(2), pages 42-60.
    • Handle: RePEc:mes:challe:v:54:y:2011:i:2:p:42-60
    DOI: 10.2753/0577-5132540202
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    References listed on IDEAS

    as
    1. Ms. Selma Mahfouz & Mr. Richard Hemming & Mr. Michael Kell, 2002. "The Effectiveness of Fiscal Policy in Stimulating Economic Activity: A Review of the Literature," IMF Working Papers 2002/208, International Monetary Fund.
    2. Giuseppe Fontana, 2009. "The transmission mechanism of fiscal policy: a critical assessment of current theories and empirical methodologies," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 31(4), pages 587-604, July.
    3. Steven M. Fazzari, 1994. "Why Doubt the Effectiveness of Keynesian Fiscal Policy?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(2), pages 231-248, December.
    4. Olivier Blanchard, 2009. "The State of Macro," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 209-228, May.
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    Cited by:

    1. Jawadi Fredj & Mallick Sushanta K. & Sousa Ricardo M., 2014. "Fiscal policy in the BRICs," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(2), pages 1-15, April.

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