If governments followed the optimal fiscal policy path, surpluses in good times would counter necessary deficits during economic downturns, leading to worldwide balance. The world, however, has chosen to go in a different direction in recent decades, avoiding thrift in light of a decidedly more indebted future. When financial crises kicked off a global recession in 2008, the spotlight placed on countries' fiscal conditions put pressure on policymakers around the globe to find a way to slow the growth of deficits and debt by imposing fiscal consolidations (or, more simply, austerity). How have these policies fared across the developed world? Were they even necessary to begin with? This book examines the many factors that have contributed to the success (or failure) of such policies, including timing, magnitude, accompanying policies, composition, and more, while explaining the economic rationale behind their choices.

• Cover
• The Paradox of Fiscal Austerity
• The Paradox of Fiscal Austerity
• Copyright page
• Contents
• Introduction
• Part One: What Is and What Is to Come
  • Chapter 1
  • Disaster and Debt
    • How One Crisis Leads to Another
    • The Pandemic Begins
    • Will This Time Be Different?
    • What Causes Consumers to Consume?
    • Do We Need Fiscal Policy?
    • Notes
  • Chapter 2
  • How Did We Respond?
    • The Role of Fiscal Policy
    • The Role of Monetary Policy
    • The Last Resort: Austerity
    • The Real World
    • Notes
  • Chapter 3
  • What We (Think We) Knew, Before We Didn’t Know
    • The Theory of Expansionary Fiscal Contractions
    • If Not EFC, Then What?
    • Notes
  • Chapter 4
  • How’d It All Work Out?
    • Loads and Loads of Debt
    • Confidence is King
    • Kill the Debt or Let it Ride
    • New Debt Data
    • Money Policy Caveat . . . Again
    • Notes
  • Chapter 5
  • It’s All Political
    • When Politics and Economics Marry
    • Not So Expansionary Fiscal Contractions
    • Austere Political Careers
    • Notes
• Part Two: Some Interesting Cases
  • Chapter 6
  • Hellenic Hellions or Heroes of Hellas?
    • The Good Times
    • Big Fat Greek Crisis
    • What Now?
    • Troikan Austerity
    • Notes
  • Chapter 7
  • The Enchanted (and indebted) Island of Puerto Rico
    • How it all Got Started
    • Rising Debts of the 1980s
    • Doubling Down in the 1990s
    • Puerto Rico’s Lost Decade
    • In the Middle of a Crisis
    • The Good ol’ Days
    • Resistant to Necessary Change
    • Notes
  • Chapter 8
  • Nipponomics
    • Brief Economic History
    • Fiscal Consolidator-in-Chief
    • Was Austerity the Cure?
    • Notes
  • Chapter 9
  • The Paradox of Argentine Austerity
    • Latin American Economics
    • Where the Silver Country Fits In
    • Why Didn’t We Do This the First Time?
    • They’re Baaaaaack
    • The New, Old Economics of Argentina
    • Back to the Austerity Drawing Board
    • Notes
  • Conclusion
    • Note
• Bibliography
• Index
• About the Author