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2019-04-06

Keynesian dogma has become something close to a secular religion in popular economic-policy debates. But...

 “Austerity,” Alesina,  Favero, and  Giavazzi write, “indicates a policy of sizable reduction of government deficits and stabilization of government debt achieved by means of spending cuts or tax increases, or both.”

Former IMF chief economist Olivier Blanchard’s recent address at the American Economic Association. Blanchard made headlines by endorsing the view that future growth will almost invariably be sufficient to cover future interest payments, implying that the debt in most advanced economies is far below the level that would ever cause problems.

Austerity is a towering scholarly achievement, embodying decades of research and destined to serve as a touchstone for future studies – both by those who will build on it and by those who will try to tear it down.

Alberto Alesina, Carlo Favero, and Francesco Giavazzi, Austerity: When It Works and When It Doesn’t, Princeton University Press, 2019.

Kenneth Rogoff Project Syndicate 5 April 2019

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