23 June 2012

Austerity - Too much of a good thing?

The French and Greek elections, together with a softer than expected eurozone macro-economy, are forcing a rethink of the austerity-only solutions embraced by political leaders across Europe. This eCollection, edited by Giancarlo Corsetti, brings together analysis by leading thinkers on austerity.

This eCollection of Vox columns – which first appeared in the Debates section of VoxEU.org – presents the research-based analyses of some of the world’s most authoritative economists on fiscal matters. They consider these questions from a wide range of perspectives. Some argue strongly that austerity has been misapplied and is killing the patient it was intended to save. Others argue that, given high debt ratios, austerity is the least bad option.

While the authors differ sharply on whether austerity has gone too far too fast, none denies the need for medium-term adjustment. With ageing populations, rising healthcare costs, and global crisis-linked debt, the need for fiscal discipline is clear. 

The eurozone cannot have it both ways. Crisis countries are rightly asked to take stern measures to correct their imbalances. This is a necessary component of a strategy for recovery. But individual countries’ efforts, no matter how strong, cannot fix problems that are inherently systemic. An equally strong initiative at eurozone level is what the survival of the single European currency, and perhaps much more, ultimately depends on.

The following articles are featured:

The austerity question: 'How?' is as important as 'how much?'
Alberto Alesina and Francesco Giavazzi

Spending cuts to improve confidence? No, the arithmetic goes the wrong way
J Bradford DeLong

A time to spend: New insights into the multiplier effect
Pontus Rendahl

The coming revolt against austerity
Charles Wyplosz

The austerity debate: Make haste slowly
Carlo Cottarelli

Fiscal austerity and policy credibility
Marco Buti and Lucio R Pench

Fiscal consolidation: Too much of a good thing?
John Van Reenen

Too early to sound the alarm
Manfred J M Neumann

The impossible hope of an end to austerity
Charles Wyplosz

Weekend elections: Democracy and the fiscal compact
Francesco Daveri

Is high public debt harmful for economic growth? New evidence
Ugo Panizza and Andrea F Presbitero

Has austerity gone too far?
Giancarlo Corsetti

 

Link to full PDF

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