More skepticism on austerity from the IMF’s highest office

4 Jan

The skepticism comes from the head economist Olivier Blanchard. So what did the study find? That “in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters.”

Interesting to see how the IMF lives with the contradiction of stressing austerity just as its research finds it counterproductive.

The full study is here
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40200

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