Numerous governments across Europe have embarked on strict austerity programs. Europe is also sliding into a deep recession, with some countries already essentially in deep depression. Are the two phenomena related? Is the austerity exacerbating the economic downturn? Yes and no, and the yes should be no surprise. For context, recall that the Obama Administration was greeted by a global financial contagion and the Great Global Recession. The budget deficit was already rising rapidly as tax receipts fell, thus creating a powerful countercyclical force, according to standard Keynesian theory. Obama … More
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By Mark A. Calabria
Apologists for big government have regularly warned that Europe’s austerity measures would push the European economy into a recession. To some extent they’ve been correct, but not for the reasons they claim. So far austerity in countries like Greece and Italy have been austerity for the private sector, not the public. They’ve attempted to close budget gaps [...]
Italy Slowly Recognizes that the Substance of ‘Austerity’ Matters is a post from Cato @ Liberty – Cato Institute Blog
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After much wrangling and consternation, the Greek government has agreed to the latest round of “drastic austerity measures,” the most significant of which is the promise to cut 15,000 government jobs. In return, the Greeks will receive 130 billion euros ($170 billion) of European bailout money to keep the Greek state afloat and, crucially, in [...]
Cutting the Government—Greek Style is a post from Cato @ Liberty – Cato Institute Blog
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