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Self-defeating austerity?

June 16th, 2013 · No Comments

Their argument is that in the current environment of near-zero interest rates, fiscal deficits are unusually cheap to finance and monetary policy is not going to move to offset much (if any) of the effects of fiscal policy on the economy. Under these conditions, it is indeed possible that austerity today may reduce future tax revenues by so much that the national debt ends up larger than it would have been without austerity.

US Federal deficit shrinking fast

Tags: Balance sheet recession · Fiscal policy