Abstract
This paper discusses the fiscal and monetary policies that were adopted by the crisis countries. It challenges the commonly held view that the countries followed policies of ‘austerity’. It shows that in most countries there was far less reduction of public spending than reported or believed. This paper argues that the fiscal and monetary policies that were followed may have had damaging repercussions on private investment and private spending, because of their impact on psychology and on uncertainty. This paper also questions the assumed benefits of the monetary policies followed, because of their negative impact on income distribution.
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Acknowledgements
Paper presented at the 20th Dubrovnik Economic Conference, in Croatia, on 7 June 2014. A much earlier version had been presented at a ‘Research Seminar on New Approaches to Economic Challenges’, at the OECD (Paris), on 25 November 2013. Assistance on data, received from Julio Escolano, at the IMF, and Alex Tanzi, at Bloomberg Network, is much appreciated. Comments on earlier drafts, received from Professor Paul Wachtel and from an anonymous referee, helped to improve the paper.
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Tanzi, V. Fiscal and Monetary Policies During the Great Recession: A Critical Evaluation. Comp Econ Stud 57, 243–275 (2015). https://doi.org/10.1057/ces.2014.36
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DOI: https://doi.org/10.1057/ces.2014.36