<p><a href="http://eml.berkeley.edu/~webfac/cromer/e134_sp13/Lecture%2026%20Slides%20Long.pdf" rel="nofollow">This set of lecture notes</a> cites a bunch of great studies.</p>

<p>Effectively, this lecture said that fiscal consolidation (austerity) might have been expansionary (good). The <a href="https://www.richmondfed.org/publications/research/economic_brief/2013/pdf/eb_13-09.pdf" rel="nofollow">Federal Reserve</a>, however says:</p>

<blockquote>
  <p>fiscal consolidation is not likely to be expansionary today.</p>
</blockquote>

<p>The deciding factor seems to be whether Monetary Policy can offset short-term effects, thogh the Fed goes on to close with:</p>

<blockquote>
  <p>In summary, economists have not definitively answered the question of whether and when austerity is likely to be beneficial. Much of the debate ignores the question of whether implementing austerity is feasible in nations with nonexistent records of long-run fiscal consolidation or that rely on foreign sources of deficit financing. The economic volatility of recent years provides a ripe area of future study regarding the true effects of fiscal contractions.</p>
</blockquote>

<p>Or, "We'll see..."</p>

CC BY-SA 3.0
2014-12-05T15:52:25.497Z
2014-12-05T15:52:25.497Z
Jason Nichols
<p>Is there much research into the long term impacts of government fiscal contractions. </p>

<p>I have heard about 2nd generation unemployed as a result of Thatcher's policies but that is very much anecdotal. What does the literature have to say on the matter?</p>

<p>I have left the interpretation of government fiscal contraction open so as to capture a broad variety of policies. </p>

<p>There are many articles focusing on short term impacts, not so much long term impacts</p>

<macroeconomics>
Long Term Impacts of Austerity Measures
Jamzy
# Long Term Impacts of Austerity Measures

(Asked by: username_0 on 2014-12-04)

Is there much research into the long term impacts of government fiscal contractions.

I have heard about 2nd generation unemployed as a result of Thatcher's policies but that is very much anecdotal. What does the literature have to say on the matter?

I have left the interpretation of government fiscal contraction open so as to capture a broad variety of policies.

There are many articles focusing on short term impacts, not so much long term impacts

**Tags:** macroeconomics

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## 1 answers

### Answer by username_1 on 2014-12-05. Score: 2 | Accepted answer

[This set of lecture notes](http://eml.berkeley.edu/~webfac/cromer/e134_sp13/Lecture%2026%20Slides%20Long.pdf) cites a bunch of great studies.

Effectively, this lecture said that fiscal consolidation (austerity) might have been expansionary (good). The [Federal Reserve](https://www.richmondfed.org/publications/research/economic_brief/2013/pdf/eb_13-09.pdf), however says:

> fiscal consolidation is not likely to be expansionary today.

The deciding factor seems to be whether Monetary Policy can offset short-term effects, thogh the Fed goes on to close with:

> In summary, economists have not definitively answered the question of whether and when austerity is likely to be beneficial. Much of the debate ignores the question of whether implementing austerity is feasible in nations with nonexistent records of long-run fiscal consolidation or that rely on foreign sources of deficit financing. The economic volatility of recent years provides a ripe area of future study regarding the true effects of fiscal contractions.

Or, "We'll see..."


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