Alesina on austerity: round 2

(Before It's News)

Alberto Alesina has returned to the fray with a new paper that shows how tax rises are far more damaging than tax cuts. With a new dataset covering the recessionary years, this is the most up-to-date evidence on fiscal consolidation available. Importantly, they are unable to discern evidence that the ZLB caused the effects of fiscal policy to be greater. Of course, this isn’t the final word and it’s only one piece of evidence, but I’ll be reading it closely over the next few days.

Fiscal adjustments based upon cuts in spending appear to have been much less costly, in terms of output losses, than those based upon tax increases. The difference between the two types of adjustment is very large. Our results, however, are mute on the question whether the countries we have studied did the right thing implementing fiscal austerity at the time they did, that is 2009-13.

• Seriously
• Dow Jones Falls Again Today on Energy, Retail Woes
• GoPro Stock Was Doomed Even Without Apple Patent (Nasdaq: GPRO)
• Kurzweil’s Black Swans
• US Sector ETF Performance – January 14
• Daily Risk Monitor – January 14
• Copper price clobbered – FT
• Market Commentary: Afternoon Trading Cut Morning Losses By Half, Oils Rebound 6% Providing A Temporary Market Relief
• Rules and direction
• QE, here we come.