no rationale for either reduction or further accumulation of public debt. In contrast, ambiguity about the cycle can … generate optimal policies that resemble "austerity" measures. Optimal policy prescribes front-loaded fiscal consolidations and …

and USA in between. Policy wise, we claim that austerity policies may have unexpected adverse effects on job creation if …

Austerity measures are frequently enacted when the sustainability of public finances is in doubt. Such doubts are … reflected in high sovereign yield spreads and put further strain on government finances. Is austerity successful in restoring … economic activity. The conditions under which austerity takes place are crucial. During times of fiscal stress, spreads rise in …