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No Plan B: But is There a ‘Third Way'?

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  • Kent Matthews

Abstract

This paper reviews the argument for a slowdown in the fiscal consolidation policy of the UK government. It reviews the existing literature and the evidence of the interwar period in the UK where a recovery occurred without a relaxation of the tight fiscal regime of the period. It argues that even in a zero‐lower‐bound, the evidence for a plan B is weak. Given that there may have been significant capacity destruction, the paper suggests a third way that calls for a supply‐side framework that sets the condition for an improvement in long‐term growth and productivity.

Suggested Citation

  • Kent Matthews, 2013. "No Plan B: But is There a ‘Third Way'?," Economic Affairs, Wiley Blackwell, vol. 33(2), pages 220-231, June.
    • Handle: RePEc:bla:ecaffa:v:33:y:2013:i:2:p:220-231
    DOI: 10.1111/ecaf.12014
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