<p>There has been some papers and articles put forth from the IMF over the last few years suggesting that Austerity has caused many European economies to drag and not recovery from the great recession as well as they otherwise could have.  I pulled the first article I found referencing the IMF research (from Washington post): <a href="https://www.washingtonpost.com/news/wonk/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/" rel="nofollow">https://www.washingtonpost.com/news/wonk/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/</a></p>

<p>I think the largest concern with respect to expansionary fiscal policy in today's economic climate is the crowd-out effect that huge public debt can have on private investment.  Perhaps someone can link a solid paper about that effect.</p>

CC BY-SA 3.0
2016-07-26T17:51:46.163Z
2016-07-26T17:51:46.163Z
bappers2
<p>In reading <a href="http://www.nytimes.com/2013/04/26/opinion/krugman-the-one-percents-solution.html" rel="nofollow">this</a> article of Paul Krugman, we immediately see that in his opinion the literature that defended the possibility of the fiscal multiplier being negative for some high-debt countries, i.e. austerity have expansionary effects on output, is no longer supported. </p>

<p>Is this true? </p>

<p>What papers have since then been produced that support austerity? and what papers have been produced that go against austerity?</p>

<p>Any help would be appreciated.</p>

<macroeconomics><debt>
Can fiscal consolidation be expansionary?
An old man in the sea.
# Can fiscal consolidation be expansionary?

(Asked by: username_0 on 2016-07-26)

In reading [this](http://www.nytimes.com/2013/04/26/opinion/krugman-the-one-percents-solution.html) article of Paul Krugman, we immediately see that in his opinion the literature that defended the possibility of the fiscal multiplier being negative for some high-debt countries, i.e. austerity have expansionary effects on output, is no longer supported.

Is this true?

What papers have since then been produced that support austerity? and what papers have been produced that go against austerity?

Any help would be appreciated.

**Tags:** macroeconomics, debt

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## 1 answers

### Answer by username_1 on 2016-07-26. Score: 0 | Accepted answer

There has been some papers and articles put forth from the IMF over the last few years suggesting that Austerity has caused many European economies to drag and not recovery from the great recession as well as they otherwise could have. I pulled the first article I found referencing the IMF research (from Washington post): <https://www.washingtonpost.com/news/wonk/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/>

I think the largest concern with respect to expansionary fiscal policy in today's economic climate is the crowd-out effect that huge public debt can have on private investment. Perhaps someone can link a solid paper about that effect.


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